-Caveat Lector-
In a message dated 6/29/01 12:14:29 AM Mountain Daylight Time,
[EMAIL PROTECTED] writes:
<< On 29 Jun 01, at 1:39, Tito Hammond wrote:
> Bush
> even set up the economy for Clinton so that those who are ignorant would
> believe the booming economy was created by Clinton.
I seriously doubt this is true. Bush created a mini recession that continued
into the early Clinton years.
Steve >>
What is your source for this recession?
http://www.gserc.usm.edu/united_states_economy.htm
The United States Economy
Growth in Output
The decade of the 90’s has been one of unprecedented growth and
prosperity for the United States economy. Since the most recent recession
that ended in the first quarter of 1991, real GDP (inflation-adjusted value
of the nation's output) has grown constantly at an average rate of more than
3% per year. Since the end of 1995 real GDP growth has been above 4% per year
consistently. Reflecting similar strength in the nation’s output of products
and services, the index of industrial production has risen at an average
annual rate of approximately 3.7% since 1990. Growth in output has generated
robust growth in personal income, which has grown at an average annualized
rate of 5.28% during the decade. Growth in demand for products at the retail
level has kept pace with total retail sales increasing at more than 5.5% per
year since 1990.
Labor Markets
With such vigorous growth in the nation’s production of output during the
1990s, it is not surprising that employment growth was similarly strong.
While the labor force grew at an average rate of 1.14% per year, actual
employment grew by more than 1.3% per year for the same period. That resulted
in persistent declines in the unemployment rate from a high of 7.5% in 1992
to 4.2% for 1999. Historical perspective has taught expert and casual
observers alike that periods of high GDP growth and low unemployment cannot
be sustained without abnormally high (and accelerating) inflation rates.
Price Stability
Inflationary pressures that were expected, especially during the latter
half of the '90s did not materialize. Using percentage changes in the GDP
price deflator, the broadest measure of inflation, the rate fell from almost
4% in 1990 to less than 3% through 1995, and under 2% for the remaining years
of the decade. Inflation in consumer prices was similarly low, also falling
below 2% during 1997-98. Nearly a decade of sustained high growth in output
and employment combined with stable prices and full employment represents a
rare occurrence in our nation's economic history. How does one explain the
phenomenal performance ?
Productivity Growth
Using the benefit of hindsight, the answer to that question is reasonably
clear. For the production of goods and services, the supply side, the key to
growth has been increasing productivity, enhanced by accelerating
technological advancement. Analysis of figures in Table 1, shows
productivity growth measured by the percentage change in output per hour of
work was positive throughout the '90s. During the final four years of the
decade, productivity grew at an average rate of almost 3% per year. The
ability to produce increasing levels of output per hour of work at home and
the availability of products produced at low cost abroad helped to relieve
inflationary pressures that otherwise would have been present.
Consumer Demand
Demand for products and services remained strong , buoyed by spending by
consumers who made purchases out of rising incomes and even more rapidly
rising stores of wealth. As cited above, personal income rose at more than
5.25% per year, and gains in wealth were even more impressive. The S&P 500
Index, for example rose from approximately 267 at the end of 1989 to 1469 by
the end of 1999, an average increase of more than 21% per year for the entire
period. That exponential rise in the value of equity shares affected both the
demand for products and the ability to produce them more inexpensively.
Additional household wealth not only stimulated additional spending for big
ticket items such as housing and SUVs, but also it made financing readily
available to firms, allowing them to introduce new technologies to the
marketplace.
Summary
For the U.S. economy, the 1990s was a decade of robust growth in output
supported by equally robust productivity growth based on technological
advancement and spending based on the wealth effect. From the macroeconomic
perspective, it was a period during which most of the economic news was very
good.
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