GDP Growth

During the Reagan Era GDP (Gross Domestic Product, or the total output of the nation) grew substantially. Overall the economy expanded by a third, or the equivalent of the entire West German economy.

Looking at the growth by quarter, we can see that the economy was quite sluggish at the end of the Carter Era. The two recessions during the Carter budget years were a sign of the inability of that adminstration to achieve an extended period of growth.

But as predicted by Supply Side economic theory, the across-the-board marginal rate cuts for the Federal income tax spurred not just a long period of growth, but the longest in peace-time history at that point in time.

When the Reagan economic program took effect in 1982, the economy took off and never looked back, growing at an average annual rate of 4.3%. As a comparison, average annual growth for the twelve years from 1990-2001 (since Reagan) was 2.95%, for 1991-2001 (previous trough to peak) it was 3.05% and for 1992-2001 (the last expansion) it was 3.4%.

So the Reagan expansion growth was better than the last expansion by almost a full percent per year and the growth for all the Reagan years was greater than the growth since by half a percent. That’s a lot of support for the claim that Reagan’s policies have produced the best growth in a generation. (The average growth for the eight Clinton years was 3.55%, and it was part of the last expansion period.)

You can also view a graph of per-capita GDP.

Note: the below tables use figures from 1996. Updated figures using 2000 data show slightly higher growth.

GDP is in billions of chained 1996 dollars.

Source: Bureau of Economic Analysis.

The Reagan Expansion

From 1982-89 the United States experienced a record-setting expansion. The expansion would set a record for peace-time growth, lasting longer than any other peace-time expansion up until that time. During this time the GDP grew at an annual rate of 3.5% (4.3% for the expansion), a rate greater than in the decade before not equaled after until the Republicans took control of Congress in 1994.

You can view a graph of the Reagan Record as well.

Those looking for information to refute the myths about “bad checks” or “credit cards” fueling the expansion, or that President Reagan caused the deficits all by himself should visit the sections on debt and income and wealth. Also of interest will be the sections on the standard of living and incomes.

The Cato Organization has done a nice summary of the Reagan Years which supports much of what we say here on The Reagan Information Page.