Economic Recession Bush inherited the economic prosperity of the Reagan years, which rejuvenated the nation. However, by July 1990, the economy fell into a recession. The federal budget deficit increased (despite President Bush’s tax hikes) as the economy contracted and unemployment increased (by 1.8 million workers).

From the era of Reconstruction to the end of the 19th century, the United States underwent an economic transformation marked by the maturing of the industrial economy, the rapid expansion of big business, the development of large-scale agriculture, and the rise of national labor unions and industrial conflict.

The construction of paved roads, new canals, and railroads allowed, or forced, more Americans into the larger economy. East and West, and to a lesser extent North and South, were joined by transportation routes that carried commodities to national and foreign markets.

America’s involvement in World War II had a significant impact on the economy and workforce of the United States. Our involvement in the war soon changed that rate. American factories were retooled to produce goods to support the war effort and almost overnight the unemployment rate dropped to around 10%.

Sluggish economic, employment and wage growth marked the period from 1991 to 1995. In comparison, accelerated employment, productivity and wage growth, as well as faster investment and consumption growth were characteristic in the later 1990s through to the end of 2000.

Proposed reasons for the Boom Possible reasons for the economic boom: The mid to late 1990s was characterized by significantly low oil prices (the lowest prices since the Post World War 2 Economic Boom), which would have reduced transportation and manufacturing costs, leading to increases in economic growth.

The recession of the early 1990s lasted from July 1990 to March 1991. It was the largest recession since that of the early 1980s and contributed to George H.W. Bush’s re-election defeat in 1992.

The economy returned to 1980s level growth by 1993, fueled by the desktop computer productivity boom, low interest rates, low energy prices, and a resurgent housing market. Strong growth resumed and lasted through the year 2000.

At the height of the 1990s economic boom—a period of unprecedented growth—capitalism American-style seemed triumphant. After sluggishness in the 1970s and 1980s, productivity in the United States had risen sharply, to levels that exceeded even those of the boom following World War II.

The 1990s was a time of increasing globalization of the world economy, mostly as the result of technological advancements, the collapse of the USSR, and new free trade agreements. One way that the US economy was affected was that imports and exports increased significantly.

The private service-producing industries ac- counted for nearly 90 percent of the job growth in the 1990s and increased their share of total non- farm employment by more than 4 percentage points.

Primary factors believed to have led to the recession include the following: restrictive monetary policy enacted by central banks, primarily in response to inflation concerns, the loss of consumer and business confidence as a result of the 1990 oil price shock, the end of the Cold War and the subsequent decrease in …

In 1998, the global economic growth slowed down. According to preliminary data the gross production of the world countries increased by about 2%, remaining below the 1997 level (3.5%; see Table 1.1.

In the past, US inflation used to rise during economic booms, as businesses charged higher prices to cope with increases in wages and other costs. When the economy cooled and joblessness rose, inflation declined. This pattern changed around 1990.

The crash in the 1990s was largely caused by spiralling interest rates, which rose to unprecedented levels of between 12 per cent and 14 per cent between 1989 and 1991. That meant that many homeowners who had taken out big mortgages could no longer afford the repayments.

Since the founding of the United States in 1776, the highest year-over-year inflation rate observed was 29.78 percent in 1778. In the period of time since the introduction of the CPI, the highest inflation rate observed was 19.66 percent in 1917.

This inflation was due to rising oil prices (oil prices tripled in the 1970s). Unions were relatively powerful and were bargaining for higher wages to keep up with the rising cost of living – causing a wage-inflationary spiral.

The 1970s saw some of the highest rates of inflation in the United States in recent history, with interest rates rising in turn to nearly 20%. Central bank policy, the abandonment of the gold window, Keynesian economic policy, and market psychology all contributed to this decade of high inflation.

Runaway Inflation Kills Housing The reason interest rates, which ultimately are set by the Federal Reserve, exploded in 1980 was housings’ arch nemesis, runaway inflation. The cause was an inflationary spiral brought on by rising oil prices, government overspending and rising wages.

Rising oil prices should have contributed to economic growth. In reality, the 1970s was an era of rising prices and rising unemployment;2 3 the periods of poor economic growth could all be explained as the result of the cost-push inflation of high oil prices.

The 1970s are famous for bell-bottoms and the rise of disco, but it was also an era of economic struggle, cultural change and technological innovation.

As a result of the increased inflation, demand for products dropped. This led to layoffs, resulting in higher unemployment.

In January 1977 Jimmy Carter succeeded Gerald Ford as President after defeating the incumbent in a close election. The economy was in a recession when Carter came to Washington.

In the United States, the economic recovery from the 1973 to 1975 recession had many of the characteristics of a typical U-type recovery. GNP (the measure at the time) reached and exceeded its pre-recession level by first quarter 1976. Industrial production had recovered to its pre-recession levels by the end of 1976.

Job creation by US presidential four-year term