Krugman notes Reagan expansion 3rd best after JFK and Clinton - but

[papau]

Reagan was a bounce off of the worst recession in our history - and the bounce always has good numbers (over all 8 years Reagan GDP growth was only 3.4% after adjustment for inflation, collecting 70% of the taxes that would have been collect with a Carter economy (and Carter's GDP growth was 3.3% after adjustment for inflation). Indeed Reagan Bush entered in 1981 with 7.2% unemployment rate and leave 12 years later in 92 with a 7.2% unemployment rate (and over the 8 Reagan years the UE rate averaged 7.5%). Thank God the rich got their Reagan tax cuts!



http://www.nytimes.com/2004/06/11/opinion/11KRUG.html

An Economic Legend
By PAUL KRUGMAN Published: June 11, 2004

In the movie "The Man Who Shot Liberty Valance," a reporter defends prettifying history: "This is the West, sir. When the legend becomes fact, print the legend." That principle has informed many of this week's Reagan retrospectives. But let's not be bullied into accepting the right-wing legend about Reaganomics.

Here's a sample version of the legend: according to a recent article in The Washington Times, Ronald Reagan "crushed inflation along with left-wing Keynesian economics and launched the longest economic expansion in U.S. history." Actually, the 1982-90 economic expansion ranks third, after 1991-2001 and 1961-69 — but even that comparison overstates the degree of real economic success.

The secret of the long climb after 1982 was the economic plunge that preceded it. By the end of 1982 the U.S. economy was deeply depressed, with the worst unemployment rate since the Great Depression. So there was plenty of room to grow before the economy returned to anything like full employment.

The depressed economy in 1982 also explains "Morning in America," the economic boom of 1983 and 1984. You see, rapid growth is normal when an economy is bouncing back from a deep slump. (Last year, Argentina's economy grew more than 8 percent.)

And the economic expansion under President Reagan did not validate his economic doctrine. His supply-side advisers didn't promise a one-time growth spurt as the economy emerged from recession; they promised, but failed to deliver, a sustained acceleration in economic growth.<snip>

[swinney]

1. 50's-60's-70's out do anything afterwards.

[Blue Wally]

2. Not exactly

We had a recession from 1958 to 1961 that narrowly elected JFK and defeated Richard Nixon in 1960.

The 70s really sucked from beginning to end. Worst decade of my life.

[happyslug]

3. The 1958 Recession was the worse one till 1982

How come the real bad recessions come during GOP administrations? the 1958 (Eisenhower), 1982 (Reagan) 1991 (Bush I) and the 2001 (Bush II)? and the TWO BEST BOOMS occured during DEMOCRATIC ADMINSTRATIONS (JKF-LBJ and than Clinton)?

[Blue Wally]

4. 1982

We were in a very long recession from about 1975 to 1982 which ended the presidencies of Gerald Ford and Jimmy Carter. Remember the "misery index" we laid on Ford in 1976 that came back to bite us in 1980?

[happyslug]

8. A recession from 1975 till 1982??????

Than why was Carter trying to cause one in 1979 (He wanted it over and done with before the 1980 election).

Recessions rarely last 2 years let alone 7 years thus we did NOT have a recession from 1975 till 1982. According to the National Bureau of Economic Research, Inc. the last six recessions started and ended on the following dates (Peak is when the Business cycle peaked and started to decline; Trough is when the recession bottomed out and a recovery began):

Peak Trough
December 1969 till November 1970
November 1973 till March 1975
January 1980 till July 1980
July 1981 till November 1982
July 1990( till March 1991
March 2001 till November 2001

See http://www.nber.org/cycles.html/

Thus a recession bottomed out in 1975, but we had a recovery till the next peak in January 1980 (Which bottomed out in July 1980). This was the recession Carter tried to incur in 1979, the economy was so strong it did not set in till 1980 and than only lasted six months (Just enough for Carter to lose the election).

The next big Recession was the July 1981-November 1982 Recession under Reagan. Thus we had a recovery from 1975 till 1980. The problem was Carter had to endure the price increases caused by the initial shock of the Iran-Iraq war. This is what forced prices to double digits but as you can see Carter produced a strong economy that only did six months of Recession, it was followed by another 5 months in length.

My point here is recessions rarely last as long as the one under Bush II and when Democrats are in shorter than when the GOP is running the Economy.

that was its

[PROGRESSIVE1]

5. Reagan made the second recession in 1981 and then things got....

better even though things got worse first and that moran was supposed to be a "genius"!!!

:wtf:

As Krugman points out, Reagan made the rich, richer, and the poor, poorer!!!

[tritsofme]

6. I had always agreed with Volker in wringing inflation

out of the system in the early 80s, it caused a rather large recession, but the runaway inflation that had plagued the economy throuhgout the 70s was put under control.

[happyslug]

7. That is Volcker's claim

I am one of those people who believe that the inflation of the time period was caused more by the increase in Fuel costs than any increase in the Monetary supply. Now Inflation existed prior to the increase in gasoline (Which started in 1970s as the US Internal production peaked) and lasted long past the decline in Gasoline prices (Which occurred under Reagan even as inflation still persisted at 4-5% per year).

Thus Volcker did NOT take inflation out of the system, he could not as long as the US was running a Deficit (Thus why we had low inflation when the budget under Clinton approached and than became balanced for the first time since 1969). Volcker was able to reduce inflation but only that inflation caused by the increase in Fuel Costs NOT the inflation caused by the Deficits (Carter had also reduced the Deficit and his reduction in the the deficits was one of the causes of the economic situation that occurred during his administration).

Inflation persisted throughout the Reagan and Bush administration (Neither really tried to balance the budget) but inflation was controlled by the drop in the price of oil (Do to the fact Iran and Iraq where busy undercutting each other in oil prices as their tried to kill each other AND Thacher's decision to pump as much as she could from the North Sea). Thus Volcker's effort was to reduce inflation to a level that would have been unacceptably high in the 1960s. If you go by inflation from 1945-1970, Volcker's efforts would be viewed as a failure that caused MASSIVE harm to the economy. The inflation would have come back had the bottom not drop out of the oil market during the same time period.

As to the "Runaway inflation" of the Carter years, that was caused by the rapid increase of oil do to the early phases of the Iran-Iraq war when the war was interfering with the export of oil from both countries. You had inflation up to 18% per annum at that time period but these were fuel costs inflation not deficit caused inflation. Volcker could only remove the inflation caused by the oil increase, for the oil had stabilized and started to drop when Volcker became Fed Chairmen. Volcker did what he could but could only kill oil price increase inflation not Deficient caused inflation. Thus the Reagan/Bush I deficits caused a larger inflation increase do to its year by year persistence than the high rates of the Carter years (Which only lasted barely 2 years and were oil related).