Wage price-spiral causes fed overreaction leading to a double-dip recession

(Congressional Research Service, “Where Is the U.S. Economy Headed: Soft Landing, Hard Landing, or Stagflation? ,” pg online @ https://crsreports.congress.gov/product/pdf/IN/IN11963 //um-ef)

A hard landing could occur in two ways. If high inflation expectations become entrenched and a wageprice spiral occurs, the Fed may have to overcorrect with tightening to restore price stability. Alternatively, it could overdo it by tightening too quickly when inflation would have eventually subsided with less tightening. Since the last recession ended in 2020, this scenario is also called a “double dip recession.” Double dip recessions are rare, but there are parallels between the last one in the early 1980s and today. The early 1980s was the last time inflation exceeded 7%. The second recession in that episode is widely attributed to the Fed rapidly increasing interest rates, peaking at over 19%, to reduce inflation. Inflation had far to fall to restore price stability, and therefore interest rates remained high until 1982, causing an unusually long and deep recession.