A Changing Economy
A Changing Economy (1980-Present)
Reaganomics and The Era of Deregulation (1980s)
- The Reagan administration led a push for supply-side economics, commonly known as Reaganomics. This involved tax cuts to stimulate investment, cuts on government expenditure and deregulation of the economy.
- A key aspect of this era was economic deregulation, which meant removing government regulations on industries in order to promote competition and thus economic efficiency.
- Reaganomics resulted in an economic boom in the latter 1980s but also increased disparities in wealth distribution, a controversial aspect of Reagan's policies.
- Financial deregulation also led to a number of financial scandals such as the savings and loan crisis, which cost taxpayers about $150 billion.
Tech-based Economy (1990s)
- The 1990s saw a shift towards a technology-based economy, with the development of the Internet and companies such as Microsoft and Apple driving economic growth.
- This digital revolution transformed the economy—it introduced new industries, created millions of new jobs and drastically increased worker productivity.
- However, this increased reliance on technology also led to vulnerabilities, as seen during the dot com bubble burst in 2000 which caused a recession.
Globalism and Outsourcing (2000s)
- The 2000s were characterised by increasing globalisation and an increase in international trade agreements. This was demonstrated by the creation of organisations like the World Trade Organization (WTO) and agreements like the North American Free Trade Agreement (NAFTA).
- Despite its benefits, globalisation also led to an increase in outsourcing of jobs to cheaper labour markets, especially in manufacturing. This resulted in job losses and was met with significant criticism.
Financial Crisis and Recession (2008)
- The 2008 financial crisis, triggered by the subprime mortgage crisis, led to a severe global economic recession.
- Rigorous deregulation of financial services in prior years was considered to be a major cause alongside irresponsible banking practices.
- In response, the government enacted the Economic Stimulus Act in 2008 and the American Recovery and Reinvestment Act in 2009 to boost the economy.
Post-recession Economy (2010s)
- Post-recession recovery was slow and protracted, with lingering high unemployment rates in the early 2010s.
- Economic growth was seen in industries including technology and healthcare, while retail and manufacturing saw declines. This period also saw the rise of the gig economy—a labour market characterized by the prevalence of short-term contracts rather than permanent jobs.
- Income inequality has increased, with wealth largely accumulating among the wealthiest Americans, partly due to the tax policies of the late 20th and early 21st centuries.
- Strengthening environmental policies led to growth in renewable energy industries, but created tensions with traditional energy sectors such as oil and coal.