Question: On one of the financial TV shows, they were talking about a goldilocks economy. What is that?

Alan T.

Answer:

Dear Alan,

It's definitely not a common phrase -- perhaps because what it describes doesn't occur all that often.

A goldilocks economy is one when the situation is just about right -- that is, the market and the economy are not too hot, not too cold, but "just right".

In other words, the economy is not so overheated that it will cause inflation nor is it so cool that it will cause a recession.

In this so-called ideal situation, the government rarely changes any policies related to the economy and the Federal Reserve Board, rarely changes interest rates, since everything seems "golden."

The phrase may have been discussed on TV because of a March report in The Business Journal by a senior economist for the Union Bank of California who says we may be experiencing a goldilocks economy right now. You can read about the report at:
http://www.bizjournals.com/sanjose/stories/2004/03/08/daily47.html

Or, perhaps it was as a result of economist Paul Erdman's reaction to statements about the economy that Greenspan made recently to a Congressional committee. Erdman wrote that what Greenspan described is commonly known as a goldilocks economy. You can read Erdman's analysis of the situation at:
http://freerepublic.com/focus/f-news/1122669/posts

Now, armed with all this information, you can use the phrase at your next cocktail party or golf game and impress your friends. Or, maybe it will show up in a crossword puzzle!