Personal Stories

College Forum: Economic Recovery for the 80’s and 90’s.

**College Forum from American History**

The source for the American economic recovery for the 1980’s was Reaganomics.  For the 1990’s, it was the positioning of the European Union, the corporations and financial deregulations.  In the beginning of 1980’s, inflation was high, gas was expensive, and unemployment was a real issue.  Reaganomics attacked this by creating more production of goods which is termed “emphasized investments in productive enterprises.” (Henretta, 2012)

This theory would strength the economy by lowering the tax rate for corporations and wealthy Americans which would fund the production of goods and services.  (Henretta, 2012) This would create a larger demand for consumers to buy more, and more, and more.  The theory was that these tax cuts would be made up in the masses purchasing items. (Henretta, 2012) Meanwhile, this caused the federal deficit to balloon since Congress refused to cut from Social Security and Medicare.  What made matters worse is that the “trickle-down” theory would reach the middle and lower classes while Reagan continued to funnel money into defense spending. (Henretta, 2012) Reaganomics only benefited the rich, corporations and the military industry complex.

In the 1990’s, America entered the Global economy with bills signed such as NAFTA (North American Free Trade Agreement) which the United States, Canada and Mexico entered in 1994. This was a trilateral free-trade agreement signed by President Bill Clinton.   (Office of the United States Trade Representative)  In 1992, “Europe created the European Union to create a single federal state” (Henretta, 2012) which by the 1990’s had more than twenty countries who had joined.  This created more trade and zero military challenges to the United States.  (Henretta, 2012)

However, the key to the United States economic recovery in the 1990’s was the financial deregulation of banks and currency markets.  This lead to a financial boom for brokerage houses, investment firms and the free market began booming.  Unfortunately with freewheeling economy, came with costs as this was now the globalization era.  Japan, Russia, Argentina among others had almost near collapses.  (Henretta, 2012) Truly the only ones that “benefited” from this deregulation were the corporations, banks and hedge fund managers.  It was due to this uptick that ultimately caused America’s financial disaster in 2007.

In closing, typically the middle and lower classes get left out of the equation based on what history has shown.  Clearly these two very different economic recoveries of the 1980’s and 1990’s benefited those who the rules were written for: corporations, military industrial complex, banks, mortgage companies, the very rich, and the government.


Henretta, J. A. (2012). America: A Concise History, Volume Two: Since 1865. Boston: St. Martin’s.

Office of the United States Trade Representative. (n.d.). North American Free Trade Agreement (NAFTA) . Retrieved from Office of the United States Trade Representative: