Reagan’s Economic Legacy

Chart of the Week for June 10-17, 2004

As the country mourns the loss of the former President of the United States, Ronald Reagan, we look back to the economy during that time. When President Reagan took office in January of 1981 he was faced with a recession, double digit inflation, weak economic growth, a Fed Funds rate of 19% (its highest level ever), and an unemployment rate of 11% (the highest since World War II). At the end of his Presidential term in January of 1989 the rate of inflation had fallen from 12% to 4%, he had succeeded in helping the economy begin to grow at a rate of 6% annually, and unemployment was down to 7%. As you can see from the chart, the growth in the Real Gross Domestic Product (GDP) during his Presidential term reflects these positive changes. The Real GDP is a measure of the total production and consumption of goods and services in the U.S. adjusted for inflation.

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