GDP Fluctuations During the Reagan Years
Gross domestic product -- GDP -- is a measure of the goods and services produced by the economy over the course of a year. According to the U.S. Bureau of Economic Analysis (BEA) in 2010, the U.S. GDP was approximately $14.5 trillion. In 1980, the year Ronald Reagan was elect president, the GDP was $2.8 trillion. The BEA provides GDP data from the 1930s until the present.
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The Reagan Years
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Ronald Reagan was elected in 1980 and served as president of the U.S. from January 1981 until January 1989. President Reagan was best known for significantly reducing the income tax rates, and an article on the Cato Institute website credits that policy for boosting U.S. economic growth. By 1989, the U.S. GDP was at $5.48 trillion, almost double the level of 10 years earlier. The Reagan years also had inflation slowing from more than 13 percent in 1980 down to 4 percent in 1988.
The Recession Years
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The National Bureau of Economic Research shows the U.S. economy was officially in recession from January to July 1980 -- the year Reagan was elected -- and from July 1981 until November 1982 -- most of the first 18 months Reagan was in office. The quarterly GDP changes had the economy shrinking by a 3.2 percent rate in the second quarter of 1981. The following quarterly GDP changes until the end of the recession were plus 4.9 percent, negative 4.9 percent, negative 6.4 percent, positive 2.2 percent and negative 1.5 percent. The year 1982 was the only year of the Reagan terms to have annual negative GDP growth, down 1.9 percent.
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The Growth Years
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In the fourth quarter of 1982, the economy grew at a slow 0.3 percent rate. Starting in 1983 the quarterly growth rates were 5.1 percent, 9.3 percent, 8.1 percent and 8.5 percent, respectively. The 8 percent-plus growth rate continued into the first two quarters of 1984, before slowing to the 3.5 to 4 percent range. National Bureau of Economic Research data show the economic expansion that started in the fourth quarter of 1982 lasted for 92 months, until the next recession started in July 1990.
The Second Term
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The economy during President Reagan's second term exhibited steady economic growth with a 3.7 percent annual average. The GDP growth rates for the years 1985 to 1988 were 4.1 percent, 3.5 percent, 3.2 percent and 4.1 percent. Quarterly growth rates ranged from a low of 1.6 percent to a high of 7 percent. Of the 16 calendar quarters during the four-year period, nine quarters had GDP growth between 3.1 and 5.5 percent.
Records
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The 16-month recession in 1981 and 1982 was tied as the longest on record since World War II until the 18-month dip from 2007 until 2009. The 7.2 percent GDP growth rate in 1984 was the highest since 1959, when the GDP also expanded by 7.2 percent. Through 2009, GDP growth has not approached the level of 1984. From 1981 through 1988, GDP growth averaged 3.4 percent per year. In comparison the GDP grew by an average of just 1.82 percent from 2000 through 2009.
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References
- U.S. Bureau of Economic Analysis: Percent Change From Preceding Period in Real Gross Domestic Product
- U.S. Bureau of Economic Analysis: Gross Domestic Product
- InflationData.com: Historical Inflation
- National Bureau of Economic Research: U.S. Business Cycle Expansions and Contractions
- Cato Institute: Supply-Side Tax Cuts and the Truth About the Reagan Economic Record
- Photo Credit Jupiterimages/Photos.com/Getty Images
