A Goldilocks economy exists when growth is neither too hot nor too cold. Heat can cause inflation, and cold can create a recession.
Economy is not expanding or contracting too much. • Goldilocks rate / balance is characterized by an economy which is neither too heated (inflationary) nor in recessionary state. i.e. the currency is not too strong or weak in global markets.
- A Goldilocks economy has an ideal growth rate of 2% to 3% as measured by gross domestic product growth.
- It has moderately rising prices as measured by the core inflation rate.
- The term may have been created by David Shulman, senior economist of the UCLA Anderson Forecast, who wrote an article in 1992 called “The Goldilocks Economy: Keeping the Bears at Bay.”
- Goldilocks economies are temporary in nature, as seen by the boom and bust cycles.