Early 1990s recession in the United States
Encyclopedia
The United States
entered recession in July 1990, which lasted 8 months through March 1991. Although the recession was mild relative to other post-war recessions, it was characterized by a sluggish employment recovery, most commonly referred to as a jobless recovery
. Unemployment continued to rise through June 1992, even though economic growth
had returned the previous year.
Belated recovery from the 1990-1991 recession contributed to Bill Clinton
's victory in the 1992 presidential election
, during which Clinton successfully articulated slow economic growth against incumbent president George H.W. Bush.
Throughout 1900, the economy was weakening as a result of restrictive monetary policy enacted by the Federal Reserve. At the time, the stated policy of the Fed was to reduce inflation, a process which limited economic expansion. Measurable changes in GDP growth began to emerge in the first quarter of 1990, however, overall growth remained positive. The immediate cause of the recession was a loss of consumer and business confidence as a result of the [1990 oil price shock], coupled with an already weak economy.
states and the west coast
, while the Midwest
and south central
were less affected.
Other factors contributed to a slow economy, including a slump in office construction resulting from overbuilding during the 1980s. Local markets in the New England states, Southern California
, and Texas
in particular experienced the effects of commercial overbuilding, reflected in the number of bank failures and the proportion of commercial investments held by those banks. In addition, consumer confidence
moved at an erratic pace, limiting the surge in consumption expenditures that is typical of recovery periods. As a result, businesses were reluctant to hire on concerns over the strength of the economic recovery.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
entered recession in July 1990, which lasted 8 months through March 1991. Although the recession was mild relative to other post-war recessions, it was characterized by a sluggish employment recovery, most commonly referred to as a jobless recovery
Jobless recovery
A jobless recovery or jobless growth is an economic phenomon in which a macroeconomy experiences growth while maintaining or decreasing its level of employment...
. Unemployment continued to rise through June 1992, even though economic growth
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
had returned the previous year.
Belated recovery from the 1990-1991 recession contributed to Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
's victory in the 1992 presidential election
United States presidential election, 1992
The United States presidential election of 1992 had three major candidates: Incumbent Republican President George Bush; Democratic Arkansas Governor Bill Clinton, and independent Texas businessman Ross Perot....
, during which Clinton successfully articulated slow economic growth against incumbent president George H.W. Bush.
Throughout 1900, the economy was weakening as a result of restrictive monetary policy enacted by the Federal Reserve. At the time, the stated policy of the Fed was to reduce inflation, a process which limited economic expansion. Measurable changes in GDP growth began to emerge in the first quarter of 1990, however, overall growth remained positive. The immediate cause of the recession was a loss of consumer and business confidence as a result of the [1990 oil price shock], coupled with an already weak economy.
Effects
July 1990 marked the end of one of the longest peacetime economic expansion in U.S. history. Prior to the onset of the early 1990s recession, the nation enjoyed robust job growth and a declining unemployment rate. As a result of the recession, the economy shed 1.1 million jobs or 1.3% of non-farm payrolls. The bulk of these losses were in construction and manufacturing. Among the hardest hit regions were the New EnglandNew England
New England is a region in the northeastern corner of the United States consisting of the six states of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut...
states and the west coast
West Coast of the United States
West Coast or Pacific Coast are terms for the westernmost coastal states of the United States. The term most often refers to the states of California, Oregon, and Washington. Although not part of the contiguous United States, Alaska and Hawaii do border the Pacific Ocean but can't be included in...
, while the Midwest
Midwestern United States
The Midwestern United States is one of the four U.S. geographic regions defined by the United States Census Bureau, providing an official definition of the American Midwest....
and south central
South Central United States
The South Central United States or South Central states is a region of the United States located in the south central part of the country. It evolved out of the archaic southwest, which originally was literally the western U.S. South...
were less affected.
Recovery
Job losses and unemployment continued to rise and peaked at 7.8% in June of 1992. Gross domestic product grew at a slow and erratic pace in the year that followed the official March 1991 end of the recession, but picked up pace in 1992. Exports, typically a driver of economic recovery, weakened due to persistent economic problems in Europe and Japan. Perhaps the largest impact on the protracted period of unemployment following the early 90s recession were large layoffs in defense related industries. Cumulative defense downsizing resulted in 240,000 job losses from 1990-1992, representing a full 10% reduction in that sector. These cutbacks also spilled over into transportation, wholesale, trade, and other sectors tied to defense related durable goods manufacturing.Other factors contributed to a slow economy, including a slump in office construction resulting from overbuilding during the 1980s. Local markets in the New England states, Southern California
Southern California
Southern California is a megaregion, or megapolitan area, in the southern area of the U.S. state of California. Large urban areas include Greater Los Angeles and Greater San Diego. The urban area stretches along the coast from Ventura through the Southland and Inland Empire to San Diego...
, and Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
in particular experienced the effects of commercial overbuilding, reflected in the number of bank failures and the proportion of commercial investments held by those banks. In addition, consumer confidence
Consumer confidence
Consumer confidence is an economic indicator which measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. How confident people feel about stability of their incomes determines their spending activity and therefore serves as...
moved at an erratic pace, limiting the surge in consumption expenditures that is typical of recovery periods. As a result, businesses were reluctant to hire on concerns over the strength of the economic recovery.