In 1982, the US economy was gripped by the second of back-to-back recessions. Unemployment hit a post-Depression high of 10.8 percent. One in four adults was unemployed in Rockford, Ill. Federal Reserve Paul Volcker pushed the prime interest rate to 21.5 percent in his effort to lick stubborn inflation. Savings and loan institutions began to falter as their high-risk loans turned sour.
On Aug. 12, the S&P 500 dipped to 102.42, setting the stage for the third-biggest bull market in stocks since 1929. Inflation and unemployment fell. In 1984, President Reagan would cruise to reelection with an ad telling voters "It's morning again in America." By 1987, the stock market had tripled. Shareholders who were able to see beyond the gloom of the early 1980s reaped a huge return.
