1981-1982 Recession Timeline

In the 1980’s when President Regan was president, he had such a personality that he made many Americans to believe his conservative ideas. With that we had periods of economic highs, soaring stock market profits which made a lot of people a lot of money. We had a turning point in the Cold War with the Soviet Union, and also had triumphed in American foreign policies. In 1981 Regan formed a coalition with the conservative Democrats and then passes major tax cuts. The people are happy with what Regan is doing and reelects him again in 1984.

The United States boasted the largest economy of the world in the 1920s, but the glory was soon followed by an economic crisis that would devastate the country. The Great Depression was the longest economic downturn the United States had ever experienced and lasted from 1929 to 1939. While there is a lack of consensus on exactly how the Great Depression came to happen, overproduction was a leading factor, along with poor banking practices that eventually led to bank failures, ruining millions of families. The Smoot-Hawley Tariff also greatly contributed to the emergence of this tremendous recession, aggravating world trade, thus weakening economies even more.

In 1984, real economic growth boomed by six point eight percent, the highest in fifty years (Fact Real). President Reagan had earned a degree in Economics, which obviously was useful because he knew what needed to be done and how to do it. He came into office with a simple but exact plan that he frequently spoke of during his campaign; cut taxes, get control of government spending, and get the government out of the way so that the entrepreneurial spirit of the American people could be let loose (Reagan Foundation, par 2). However, on the issue whether the poor benefited more under him or Carter, and whether the rich paid a larger share of federal income taxes under him or Carter, and clearly it is in Reagan’s favor.

As a result, Reagan won against Jimmy Carter (489 to 49 electoral votes). On January 20th, 1981 he took office (History.com Staff). He obtained legislation to simulated economic growth, curb inflation, increase employment, and strength in national defense. He fought hard to cut taxes, and Government expenditures,. In 1986, Reagan obtained an overhaul of the income tax code, which eliminated many deductions and exempted millions of people with low income.

This tragic event sent Wall Street into a complete frenzy and took out millions of investors. Over the next few years, consumer investment and spending decreased. This caused sharp declines in manufacturing production and rising levels of unemployment. By 1933, 13 plus million Americans were unemployed and nearly half of the country’s banks failed (Coker, 2005). Thanks to the reform and relief measures placed by President Franklin D. Roosevelt helped diminish the most horrible effects of the Great Depression.

Ronald Reagan served as the 40th President of the United States from 1981 to 1989. During his presidency, Reagan implemented a series of economic policies that aimed to reduce inflation and stimulate economic growth. Though his policies certainly faced some criticism over the years, they were extremely successful. Ronald Reagan’s economic policies represented a significant improvement in the United States economy after his predecessor, Jimmy Carter, left office. When Jimmy Carter left office in early 1981, the economy was struggling with high inflation and high unemployment.

What causes a recession is inflation. Inflation is a general increase in prices and the fall in the value of money. Falling confidence in the consumer can be a major cause in leading to a recession. Also, manufacturing orders starting to slow down in the economy, this can lead to less money being produced throughout the economy resulting to a loss of jobs. Since this causes a high unemployment rate many of the people will get on a government welfare program to pay for their family and that is even more money being lost in the economy, making the nation fall into a deeper recession.

During his lead, the American economy went from a GDP growth of -0.3% in 1980 to 4.1% in 1988, averaging 7.91% annual growth in current dollars (William K. Niskanen). Under Reagan many jobs were created, leading to an increased GDP. November 1982, when Reagan’s economic policies began to take effect, to November 1989, shortly after he left office, 18.7 million new jobs were created; a record for a comparable period at that time (Independence Hall). Another positive effect of jobs was money for families. Reagan also simplified the tax code by reducing the number of tax brackets to four and slashing a number of tax breaks (William K. Niskanen).

The Great Recession started for the United States in December of 2007 and lasted until June of 2009. This was the worst recession in U.S. History since World War II. During this time, there was a 6.1 % loss in jobs, due the job shortages about 27 million people we either unemployed or underemployed. This affect the age household many people household income dropped increasing the poverty in America. In economics, a recession is a decline in economic activity affecting Gross Domestic Product or GDP for at least two consecutive quarters causing negative economic growth (Downes and Goodman).

The United States economy was in disarray, suffering after the 1979 energy crisis. Due to high unemployment and inflation, many Americans had lost faith in the government and the nation as a whole. When Reagan took office in 1981, the recession and this “national malaise” were already about a year old. However, many people faulted him for America’s poor condition. Immediately, he addressed the declining economy, introducing many new policies that came to be known as “Reaganomics.”

The Great Recession was the rapid decline in economic activity during the late 2000s, and it was the largest downturn since the Great Depression. The term “Great Recession” is related to the U.S. recession, and lasted from December 2007 to June 2009. It began when the U.S. housing market went downhill and lost significant value. The Great Depression and The Great Recession have similar causes because of the economic, political, and social issues.

Unemployment rates began to increase. Over time, Reagan had increased taxes 11 times, mainly on the middle class. When Reagan had left office, he had tripled the national debt of United States. This had affected the United States and led to several issues later on. This is the reason Reaganomics had both aided some and destroyed others.

The election of 1980 wasn’t even in the ball park when it came to presidential popularity in the electoral college. Reagan and Bush beat Jimmy Carter and Walter Mondale in the electoral vote 489-49. Reagan was quoted saying, “Government is not the solution to our problems; government is the problem.” This statement opened up what was known then as Reaganomics. Reagan supported the supply-side economics, the theory that lower taxes will boost the economy as businesses and individuals invest their money.

After multiple waves of panic, and the wake of the stock market crash, production slowed to an alarming level. For the next few years the United States experienced a drop in consumer spending and investment, which caused a decline in industrial output and a steep rise in unemployment. Factories and other businesses were forced to lower wages and fire several employees. By 1933, thirteen to fifteen million Americans were unemployed, and nearly half of the banks throughout the country failed. Many Americans were forced to buy with credit causing them to fall into debt.

The terrible economy had a huge impact on the American people. When president Ronald Reagan took over in 1981, the economy had been in the worst condition since the Great Depression (Shmoop Editorial Team).The crime rate increased drastically because of how bad the economy was. Violence, theft, and murder numbers increased significantly in areas where there were gangs and drugs. Overall, crime levels was so high that Congress had passed drug laws resulting in a rise in the number of U.S. prisoners (Woog