1990 Recession
1990-91 Recession
The 1990-91 recession, although milder than previous downturns, significantly affected the United States’ workforce. The 8 month long downturn, beginning in July of 1990 and ending in March of 1991, marked the end of our country’s longest peacetime expansion on record and had the lowest growth rate since the Great Depression (Gardner 3). Although the National Bureau of Economic Research concluded that the early 1990s recession lasted just eight months, conditions improved slowly even after, with unemployment reaching almost 8% as late as June 1992 (“1990-92 Early 1990s Recession”). The recession of the early 90’s seemed to be caused by a number of possible factors. To begin, Iraq 's invasion of Kuwait in August 1990 was the trigger, as it caused the worldwide increase in oil prices and caused a decrease in consumer confidence. Other statistics such as one from the first quarter of 1989 showing the output of the U.S. at 3.6 percent indicate that the economy had already been going downhill since before that time (Kamery 61). The primary cause was the decrease in consumption, which a result of an increase in oil prices following the Persian Gulf War and partly because of a slowdown in the rate of population growth. Other factors contributed to the drop in aggregate consumption demand. For example, fiscal tightening by President Ronald Reagan’s Economic Recovery Tax Act of 1981 (ERTA) did not result in the intended “Laffer Curve” supply-side effect to negate its impact on the national budget (Hall 19). Therefore, the government found itself running unprecedented deficits without a need for fiscal stimulus. However, the Tax Reform Act of 1986 was an attempt to address the problem, but a cutback in fiscal stimulus was undesirable as well (19). Either way, Regan’s efforts affected consumption negatively and consumers felt the difference. Other secondary reasons include technology, since the spread and popularity
The 1990-91 recession, although milder than previous downturns, significantly affected the United States’ workforce. The 8 month long downturn, beginning in July of 1990 and ending in March of 1991, marked the end of our country’s longest peacetime expansion on record and had the lowest growth rate since the Great Depression (Gardner 3). Although the National Bureau of Economic Research concluded that the early 1990s recession lasted just eight months, conditions improved slowly even after, with unemployment reaching almost 8% as late as June 1992 (“1990-92 Early 1990s Recession”). The recession of the early 90’s seemed to be caused by a number of possible factors. To begin, Iraq 's invasion of Kuwait in August 1990 was the trigger, as it caused the worldwide increase in oil prices and caused a decrease in consumer confidence. Other statistics such as one from the first quarter of 1989 showing the output of the U.S. at 3.6 percent indicate that the economy had already been going downhill since before that time (Kamery 61). The primary cause was the decrease in consumption, which a result of an increase in oil prices following the Persian Gulf War and partly because of a slowdown in the rate of population growth. Other factors contributed to the drop in aggregate consumption demand. For example, fiscal tightening by President Ronald Reagan’s Economic Recovery Tax Act of 1981 (ERTA) did not result in the intended “Laffer Curve” supply-side effect to negate its impact on the national budget (Hall 19). Therefore, the government found itself running unprecedented deficits without a need for fiscal stimulus. However, the Tax Reform Act of 1986 was an attempt to address the problem, but a cutback in fiscal stimulus was undesirable as well (19). Either way, Regan’s efforts affected consumption negatively and consumers felt the difference. Other secondary reasons include technology, since the spread and popularity
Cited: Commercial Real Estate and the 1990-91 Recession in the United States. Massachusetts Institute of Techonology Department of Urban Studies and Planning. Web. 18 Mar. 2013. . Hall, Robert E. "Macro Theory and the Recession of 1990-1991." AEA Papers and Proceedings: 275-79. Stanford. Web. 18 Mar. 2013. . Kamery, Robert H. "A Brief View of the Recession of 1990-1991." Allied Academies International Conference 8.2 (2004): 61-65. Allied Academies International Conference. Web. 18 Mar. 2013. . Labonte, Marc. " The Current Economic Recession: How Long, How Deep, and How Different From the Past?" CRS Report for Congress: 12-14. 10 Jan 2002. Web. 18 Mar. 2013. < http://fpc.state.gov/documents/organization/7962.pdf>. U.S. President. 1992. Economic Report of the President (February).