And before he’s finished he’ll have Bernanke resume Carter-era inflation.
In July 1953, after President Eisenhower had been in office for just six months, the U.S. economy tumbled into recession. He didn’t barnstorm around the country talking about how President Truman had driven the economy into a ditch, and how it was such a struggle to get the economy out of the ditch. Somehow, by May 1954, just 10 months later, the economy was back in recovery mode, before Barack Obama was even born.
In April 1960, the American economy tumbled into recession again. There was no trillion dollar stimulus package producing record shattering deficits and national debt. Yet, somehow, in February 1961, just 10 months later, the economy was back in recovery mode, again before Barack Obama was even born. Spurred by the across the board Kennedy tax rate cuts, the economy boomed for a then record 106 months.
In December 1969, the U.S. economy cycled into recession once again, in President Nixon’s first year in office. Somehow, by November, 1970, just 11 months later, the economy was in recovery once again, even though Barack Obama was only 9 years old.
In November 1973, the worst recession of the entire postwar era up until then began. It took 16 months for the economy to recover, starting in March 1975. Over the next four quarters, the economy came roaring back, with real economic growth of 6.2%. For 1976, the unemployment rate was 7.7%.
“The Failed Economic Policies of the Past”
In July 1981, after President Reagan had been in office just six months, the economy fell into arguably a worse recession than in 1973-75. Yet President Reagan continued to back the strong dollar monetary policies of the Federal Reserve that slew the roaring inflation of the 1970s, caused by the same monetary policy strategy that current Fed Chairman Ben Bernanke just announced last week.
In just two years, over 1979 to 1980, prices had risen by 25%. The strict monetary policy Reagan supported cut the annual inflation rate in half by 1982, and in half again by 1983, to just 3.2%. Inflation has not been heard from since.
Reagan did not adopt a trillion dollar Keynesian stimulus spending package either. In his first year, he adopted instead the much vilified Reagan budget cuts that reduced federal spending by close to 5%. Barack Obama was in college at the time, palling around with Marxist Professors as he tells us in his autobiographies, no doubt joining in the condemnation of those budget cuts.
Moreover, instead of raising tax rates as President Obama is doing, Reagan cut tax rates sharply. Instead of enacting sweeping, costly, new regulatory burdens as President Obama is doing, Reagan dramatically slashed regulatory costs on the economy.
By November 1982, despite the continued, contractionary, monetary policies that eliminated the historic inflation, the economy recovered, after 16 months of recession. In the first four quarters of recovery, the economy roared back with 7.7% real growth. After that 16 month recession, unemployment fell every year for the rest of Reagan’s term, reaching 5.3% by 1989.
The economy continued to grow without interruption for a then peacetime record 92 months, shattering the previous peacetime record of 58 months by nearly three years. During this nearly eight-year recovery, 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 20%.
In July 1990, the economy finally fell into recession again, probably because of the Bush/Democrat, tax-raising budget deal. Yet, even without a trillion dollar stimulus package, and even though Barack Obama was still just teaching Saul Alinsky classes for ACORN, the economy recovered only eight months later in March 1991. The unemployment rate in 1991 was 6.8%.
The stock market boomed again starting on Election Day, 1994, with a Republican Congress taking power for the first time in 40 years. The economy continued to grow without recession for 10 full years, until March 2001, just two months after President Bush II took office. Bush did not barnstorm the country telling voters that President Clinton had driven the economy into a ditch, nor did he adopt a trillion dollar stimulus spending package. Instead, he led enactment of the Bush tax cuts, what President Obama calls the failed policies of the past, and the recession ended in eight months, by November 2001, despite the detrimental economic effects of 9/11.
Despite Bush’s “failed economic policies of the past,” the economy continued to grow for another 73 months. After the rate cuts were all fully implemented in 2003, the economy created 7.8 million new jobs and the unemployment rate fell from over 6% to 4.4%. In response to the rate cuts, business investment spending, which had declined for nine straight quarters, reversed and increased 6.7% per quarter. That is where the jobs came from. Manufacturing output soared to its highest level in 20 years. The stock market revived, creating almost $7 trillion in new shareholder wealth. From 2003 to 2007, the S&P 500 almost doubled.
The End of Prosperity