Reed W. Mosgrove
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| Reaganomics Didn't Work? | |||||||||||||
| by Reed W. Mosgrove |
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| As a lifelong Republican and a big fan of Ronald Reagan's presidency, I have often wondered if all these stories we hear about "Reaganomics" are true. I have heard everything from how his economic policies set this nation on the brink of bankruptcy to the idea that they set this nation on an unparalleled course of prosperity. Well, in July of 2002, I decided to do some research and see if I could find some numbers that would give some kind of profile of how the economy was doing. I chose three different economic statistics: unemployment, prime rate, and economic growth (percent change in GDP). At this point, I would like to point out that I am not and economist, a researcher or any kind of expert on this subject. My degree is in communications which means that although I have no idea what I'm saying, I sure know how to say it! Ok, here we go. | |||||||||||||
| In 1976, Jimmy Carter was elected with unemployment at 7.5%, economic growth at 5.6%, and the prime lending rate at 6.25%. When he left office in 1981, unemployment was at 7.5%, economic growth was at -.2%, and the prime lending rate was at 20% (This was down from a high of 21.5% just one month earlier.). | |||||||||||||
| In 1981, Ronald Reagan took office with a promise to install what the press called Reaganomics. His vice-president, George Bush, called it voodoo economics. Whatever you call it, when he left office in 1989, unemployment was at 5.4%, economic growth was at 4.2%, and the prime lending rate was at 10.5%. Unemployment spiked in 1982 at 10.8%, the worst ever since they started keeping track in 1948. Whatever George Bush may have thought about Reaganomics during the 1980 campaign, he changed very little of the plan and by the time he left office in 1993, unemployment was at 7.3%, economic growth was at 3%, and the prime lending rate was at 6%. It was at this point that Bill Clinton was telling anyone who would listen that we were suffering through the worst economy in 50 years. | |||||||||||||
| And what of the Clinton years? We've heard so much about the Clinton boom of the 90's. What are the real numbers? We already know what they were when he took office. How did they pan out in the end? First, economic growth: Over the eight year period, he had a very healthy average of 3.7% with a high of 4.4%, a low of 2.7% (twice) and ending at 3.8%. Compared to Reagan's average of 3.4% with a high of 7.3% and a low of .2% (in 1982), George Bush's average of 1.95% with a high of 3.5% and a low of -.5%. Clearly the Reagan years kept pace with the Clinton years and may have been better. I'll get to that later. Let's look at unemployment: 4.1% when Clinton left office in 2001. Very healthy. Virtually everyone who could work was working. In fact, after the high of 7.8% in the middle of 1998, the unemployment rate continued to fall and from the middle of 1997 until the end of his term, it never went above 5% including a low of 3.8% in 2000. Astounding! At that point, literally every American who could work was working. This is tantamount to 0% unemployment, which is unachievable. There will always be a certain percentage of the population that cannot work. This is stellar news. The prime lending rate, however, was at 9%. This is a 50% increase from where it was when Clinton took office. Could this be an indicator of things to come? Certainly, by any standard the Clinton years were economically very good. | |||||||||||||
| Continued | |||||||||||||