Output Growth in the Late 1990s

J. Bradford DeLong

February 2001

  • The quarter-to-quarter growth rate of the American economy is not stable: it bounces around substantially.
  • Nevertheless, the second half of the 1990s saw real GDP growth that was remarkably strong in historical perspective.
  • The NASDAQ crash of 2000 and Federal Reserve interest rate increases that look in retrospect like an overreaction to incipient signs of rising inflation knocked the U.S. economy off this fast-growth track. In the year ending in the second quarter of 2001, real GDP grew by barely one percent.
  • In the aftermath of the terror attack on the World Trade Center on September 11, 2001, the American economy slid into recession: everyone paused for a while and postponed implementing investment plans to see what would happen next.
  • The fourth quarter of 2001 saw hopeful signs: the resumption of growth, if slow growth, in real GDP.

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