United States Economic and Financial Policy
The gross domestic product of the US grew in the period 1980-94, at current prices, at an average annual rate of about 6.8%. In 1994 it exceeded 6 trillion dollars; per capita product went from $ 12,000 in 1980 to about $ 23,000 in 1992. In real terms, the average rate of GDP growth was approximately 2.6% in the 1980s and 2% in the first five years of the 1990s., against an average value of 2.8% in the 1970s.
The economy has had large cyclical swings. In 1982 there was a strong recession, higher in intensity than that of 1975; it was then followed by a prolonged phase of expansion that lasted until 1990, which transmitted positive impulses to the rest of the world economy. This phase was characterized by important changes in the structure of the US economy, especially in the manufacturing sector and in international trade as a whole. Compared to 7% of the previous decade, inflation has decelerated significantly; it stood at 5.5% in the 1980s and dropped further to around 3.5% on average in the first half of the 1990s. Unemployment rose sharply, approaching 10% of the labor force in the year in which the contraction of the labor force was most pronounced. productive activity (1982): the highest level of the postwar period. In the following years, it gradually decreased, returning to values close to those of the first half of the 1960s. The phenomenon reflected the recovery of the ability to create new jobs, particularly in the service sectors, and to thus effectively absorb the expansion of the labor force that has resulted not only from the significant demographic increase, but also from the increase in rates. of participation. In 1990, after a long period of expansion, the US economy entered a phase of recession, mainly caused by the surge in oil prices and the decline in confidence generated by the Gulf War. As a result, a more expansive monetary policy was implemented which, together with the return of oil prices to their pre-war levels, it meant that the recession was virtually over in the second half of 1991. The exit from the recession after the end of the Gulf War did not translate into sustained GDP growth, however. and unemployment continued to rise in both 1991 and 1992, reaching 7.4% in the latter year. The recovery, favored by persistently low interest rates, continued in 1993 and 1994 accompanied by a decline in unemployment. reaching 7.4% in the last year. The recovery, favored by persistently low interest rates, continued in 1993 and 1994 accompanied by a decline in unemployment. reaching 7.4% in the last year. The recovery, favored by persistently low interest rates, continued in 1993 and 1994 accompanied by a decline in unemployment.
While the balance of current payments had recorded a modest surplus on average during the 1970s and in the two preceding decades, since 1982 there have been large and growing deficits, which represented an unprecedented event in post-World War II history; they peaked in 1987, exceeding $ 160 billion. In the following years, the deficit gradually narrowed, almost reaching balance in 1991, but then sharply recovered in the following years and again exceeded $ 150 billion in 1994. As a result of the accumulation of these deficits, the position net foreign exchange of the US recorded a sharp turnaround, passing to a negative balance in 1986 after having been in credit for the entire period after 1914. The dollar has marked a pronounced appreciation since 1980-81 reflecting the combination of a tight monetary policy (since 1979) and the expansionary fiscal policy pursued by the Reagan administration. The dollar’s period of rise culminated in February 1985; in the following months, with the help of the central banks which tended to contain its appreciation, including the American one which thus abdicated the position of ” benevolent indifference ” about the exchange rate characteristic of the first half of the 1980s, a depreciation began, interrupted by a certain recovery in 1989 and 1993 and then sharply accelerated in the first half of 1995 (in particular with respect to the mark and the yen).
In the fifteen years under examination, economic policy has undergone important changes in its conduct, in its conceptual and even ideological formulation. First, between 1979 and 1982, monetary policy approaches that drew more or less strictly on monetarism, as a school of economic thought, prevailed; but the most characterizing element was the emergence from 1980, under the Reagan administration, of a current of thought, called supply-side economics or ” supply economy ”, which in a multiform, pragmatic and, at times, contradictory way, strongly influenced the economic policy orientations, especially fiscal ones, of the following years. Government philosophy gradually changed during the second presidential term of RW Reagan (1984-88) and under the Bush administration (1988-92) becoming more eclectic, and also recovering elements of traditional ” Keynesianism ”. With the inauguration of the presidency of WJ Clinton (1992), economic policy has come to further characterize itself in an ” interventionist ” sense.