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During this 7 years, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third largest in the world at the time, to the U.S. economy. In 1984 alone, real economic growth boomed by 6.8%, the highest in 50 years. Nearly 20 million new jobs were created during the boom, increasing U.S. civilian employment by almost 20%. Unemployment fell to 5.3% by 1989. Also in that year, labor force participation reached a record 66.5 percent, and a record 63 percent of the population was employed. Black labor force participation also hit a record 64.2 percent in 1989, with female labor force participation reaching an all-time record of 57.5 percent in 1990.
Real per capita disposable income increased by 18% from 1982 to 1989, meaning the American standard of living increased by almost 20% during the boom. The Carter decline in income for the bottom 20% of income earners was reversed, with average real household income for this group rising by 12.2% from 1983 to 1989. The poverty rate, which had started increasing during the Carter years, declined every year from 1984 to 1989, dropping by one-sixth from its peak.
The shocking rise in inflation during the Carter years was also reversed. Spectacularly, inflation from 1980 was reduced by more than half by 1982, to 6.2%. It was cut in half again for 1983, to 3.2%. The prime rate was cut by two-thirds by 1987 to 8.2%, on its way down to 6.25% by 1992. New home mortgage rates also declined steadily, reaching 9.19% by 1988, on their way down to 8% by 1992. Note that opponents of the Reagan tax cuts had argued that they would increase interest rates.
The stock market more than tripled in value from 1980 to 1990, a larger increase than in any previous decade. Real personal assets rose by nearly $6 trillion, from $15.5 trillion in 1980 to $21.1 trillion in 1990, an increase of 36%. Total real private net worth rose by $4.3 trillion from 1980 to 1989, totaling $17.1 trillion in constant dollars, an increase of one-third.
Even with the Reagan tax cuts, total federal revenues doubled from 1980 to 1990, growing from $517.1 billion to $1,031 billion, or just over $1 trillion. In Reagan’s last budget year, fiscal 1989, the widely overballyhooed federal deficit had declined to $152.5 billion, about the same as a percent of GDP as in 1980. 2.9% compared to 2.8%. By 1989, the Soviet Union was collapsing. Reagan had won the Cold War without firing a shot, completing the most successful Presidency in U.S. history.p> The 25 Year Reagan Boom br> Laffer et. al point out that this Reagan recovery grew into a 25 year boom, with just slight interruptions by shallow, short recessions in 1990 and 2001. They write: br> /p>
We call this period, 1982-2007, the twenty-five year boom — the greatest period of wealth creation in the history of the planet. In 1980, the net worth — assets minus liabilities — of all U.S. households and business…was $25 trillion in today’s dollars. By 2007…net worth was just shy of $57 trillion. Adjusting for inflation, more wealth was created in America in the twenty-five year boom than in the previous two hundred years.br> They add, “The economy in real terms is almost twice as large today as it was in the late 1970s.” Moreover: br>
In 1967 only one in 25 families earned an income of $100,000 or more in real income (in 2004 dollars), whereas now almost one in four families do. The percentage of families with an income of more than $75,000 a year has more than tripled from 9 percent to almost 33 percent from 1967 to 2005.br> In addition, “A poor family in 1979 was more likely to be rich by the early 1990s than to still be poor.” The authors cite a Congressional Budget Office study, backed up by a later Treasury Department study, finding that “from 1994 to 2004 Americans in the bottom 20 percent of income actually had the highest increase in incomes.” The authors continue,
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?