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Fluctuations in the Federal Deficit
From $74,000 million in 1980, the federal budget deficit rose to $221,000 million in 1986. It fell back to $150,000 million in 1987, but then started growing again. -
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The S&L Crisis
Net Savings and Loan income, which totaled $781 million in 1980, fell to a loss of $4.6 billion in 1981 and a loss of $4.1 billion in 1982. Tangible net worth for the entire S&L industry was virtually zero. -
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Inflation 1980-1999
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The Depository Institutions Deregulation and Monetary Control Act
The Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) had phased out a number of restrictions on banks' financial practices, broadened their lending powers, and raised the deposit insurance limit from $40,000 to $100,000 (raising the problem of moral hazard).[15] Banks rushed into real estate lending, speculative lending, and other ventures just as the economy soured. -
6.9% in April 1980
Unemployment 6.9% in April 1980 -
Election of 1980
Republican candidate Ronald Reagan is elected, breaking up the New Deal coalition by taking a majority of the blue collar vote. Reagan implements Reaganomics, a supply-side system. -
American Public Expresses Economic Concern
The economic upheaval of the 1970s had important political consequences. The American people expressed their discontent with federal policies by turning out Carter in 1980 and electing former Hollywood actor and California governor Ronald Reagan as president. -
Economic Recovery Tax Act
The largest tax reduction in US history, lowest income tax rates fell from 14%-11%, the hights incomes rates fell from 70%-50%.
Corporations recieved tax breaks and tax cuts on capital gains, gifts and inheritances. The effect was trickle-down economics, leaving more money in the hands of the people, and an economy that produces a greater supply. -
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Recession of 1982
The nation endured a deep recession throughout 1982. Business bankruptcies rose 50 percent over the previous year. Farmers were especially hard hit, as agricultural exports declined, crop prices fell, and interest rates rose. -
Monetary Policy
Volcker resolved to "slay the inflationary dragon" by sharply curtailing the growth of the money supply. That monetary contraction, imposed starting in 1980, succeeded in its primary objective; the inflation rate fell from a devastating high of 13.5% in 1980 to just 3.2% by 1983.19 However, it also produced a sharp jump in real interest rates that contributed to the brutal recession of 1981-82. -
The Peak of the Recession
The peak of the recession was in November and December 1982, when the nationwide unemployment rate was 10.8% -
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1983-1987 Recovery
Consumer spending increased in response to the federal tax cut. The stock market climbed as it reflected the optimistic buying spree. Over a five-year period following the start of the recovery, GNP grew at an annual rate of 4.2 percent. The annual inflation rate remained between 3 and 5 percent from 1983 to 1987, except in 1986 when it fell to just under 2 percent -- the lowest level in decades. 13 million jobs were created. -
Strategic Defense Initiative
Reagan implements the Strategic Defense Initiative, also known as Star Wars, an advanced defense system that uses satellites to locate Soviet Nuclear weapons and destroy them mid-air should they ever be launched or activated. This program greatly expanded the US defense budget, and impacted the amount of money invested in the Cold War. -
Black Monday
In finance, Black Monday refers to Monday October 19, 1987, when stock markets around the world crashed, shedding a huge value in a very short time. The Dow Jones Industrial Average (DJIA) dropped by 508 points to 1738.74 (22.61%). The stock market crash in late 1987 dramatized doubts about the stability of the economy. -
INF Signed
Treaty signed by Gorbechev and Reagan eliminated nuclear and conventional ground-launched ballistic and cruise missiles with intermediate ranges, defined as between 500-5,500 km. This gave Americans more financial confidence as the Cold War was coming to an end. -
Economic Growth of the 1980s
GDP per capita increased by nearly 23%; since 1980, the value of the stock market more than tripled. -
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Recession 1990-1991
The recession officially started in July 1990, bringing to a close the Nation's longest peacetime expansion on record. This recession officially ended about 8 months later in March 1991. It came as a result of the stock market crash, unemployment, and high interest rates. -
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Gulf War
By 1990, economic malaise had returned with the beginning of the Gulf War and the resulting 1990 spike in the price of oil, which also increased inflation. -
Peak of Budget
After peaking at $290,000 million in 1992, the federal budget steadily shrank as economic growth increased tax revenues. -
Clinton Elected
President Clinton and Vice President Gore launched their economic strategy: (1) establishing fiscal discipline, eliminating the budget deficit, keeping interest rates low, and spurring private-sector investment; (2) investing in people through education, training, science, and research; and (3) opening foreign markets so American workers can compete abroad. -
Deficit Reduction Plan
Clinton nacted the 1993 Deficit Reduction Plan without a single Republican Vote. The plan included more than $500 billion in deficit reduction. -
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Bringing Down the Deficit
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Republican Revolution
Republicans retake the House of Representatives. American Conservativism is "in" and the goals of the Congress are to focus on economic health with limited spending and taxation -
Government Surplus
In 1998, the government posted its first surplus in 30 years, although a huge debt -- mainly in the form of promised future Social Security payments to the baby boomers -- remained. -
Stock Market Growth 1999
Combined with low inflation and low unemployment, strong profits sent the stock market surging; the Dow Jones Industrial Average, which had stood at just 1,000 in the late 1970s, hit the 11,000 mark in 1999, adding substantially to the wealth of many Americans. -
Effects of Clinton's Economy
After eight years, the results of President Clinton’s economic leadership are clear. Record budget deficits have become record surpluses, 22 million new jobs have been created, unemployment and core inflation are at their lowest levels in more than 30 years, and America is in the midst of the longest economic expansion in our history.