Early 1990s recession in the United States
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Inverted yield curve in late 1989 and early 1990
The United States entered a recession in 1990, which lasted 8 months through March 1991.[1] Although the recession was mild relative to other post-war recessions,[2] 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 a positive economic growth rate had returned the previous year.[3][4] The immediate causes of the recession were a generally weak economy and the 1990 oil price shock.
Belated recovery from the 1990–1991 recession contributed to Bill Clinton's victory in the 1992 presidential election over incumbent President George H. W. Bush.
Throughout 1989 and 1990, 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. 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.[5] Another factor that may have contributed to the weakening of the economy was the Tax Reform Act of 1986, which lowered investment incentives and contributed to the end of the real estate valuation boom of the early to mid-1980s.
Effects
July 1990 marked the end of what was at the time the longest peacetime economic expansion in U.S. history.[2][5] Prior to the onset of the early 1990s recession, the nation enjoyed robust job growth and a declining unemployment rate. The Labor Department estimates that as a result of the recession, the economy shed 1.623 million jobs or 1.3% of non-farm payrolls. The bulk of these losses were in construction and manufacturing.[2] Among the hardest hit regions were the New England states and the West Coast, while the Midwest and South Central regions were less affected.[6]
