Essay: US Macroeconomic Scenario in 1990

Sample Essay

United States economy is considered to be the greatest and most diversified economy of the world having a per capita Gross National Production (GNP) of more than $21,000 per annum. In 1989, the US has begun its eights year of continuous growth which is considered to be the longest period in peace times. This growth is the outcome of consistent improvements in the wages and employment opportunities.

The unemployment rate was 5.2% at that time which was the lowest in the previous ten years and the inflation rate was the around 4.8% at that time. In 1990, the year I was born, the US economy entered into a period of recession. The major factors of that economic downturn were the significant increase in the oil prices because of the invasion of Iraq on Kuwait (Greene and Tishchishyna). There was also a quick increase in interest rates. This increase in the interest rates put a negative impact on the availability of credit to the industry. These factors along with many others drag the national economy to recession. Because of this recessionary pressure, the output of the nation was decreased by 1.6% (Bureau of Economic Analysis). Due to the slowdown in the business activity, almost 1.7 million people were laid off (Bureau of Economic Analysis). Unemployment rose from 5.2% in 1989 to 7.5% in 1990 (Bureau of Economic Analysis). However, the economy has started to revive in the next year (1991) and this positive trend persisted in the next decade which is considered to be the third longest growth period after World War II. During this growth period, the real GDP kept on fluctuating between 2% and 3.5% till 1998.

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