Overview of 80s Economy by Frankie Horne

·        The U.S. had suffered a decade of stagflation in the 70’s (the simultaneous increase of unemployment and inflation), so Ronald Reagan instituted new economic policies upon his 1981 Presidential election.  

·        It focused on supply-side economics, also known as trickle-down economics

·        Reaganomics had four main pillars:

1.     Reduce the growth of government spending

2.     Reduce the federal income tax and capital gains tax

3.     Reduce government regulation

4.     Control the money supply in order to reduce inflation

·        Over Reagan’s two terms from 1981 to 1988, spending was a little above average and public debt increased greatly, but both the unemployment rate and the inflation rate decreased.

·        Before Reagan, the Republican Party was not partial to supply-side economics, but his implication of it made it very popular.