The Booming Economy of the 1990s

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Section Chronology

Clinton’s ability to weather impeachment owed much to the prosperous economy, which in 1991 began a period of tremendous expansion. Clinton’s policies also contributed to the boom. He made deficit reduction a priority, and in exchange the Federal Reserve Board and bond market traders encouraged economic expansion by lowering interest rates. Businesses also prospered because they had lowered their costs through restructuring and laying off workers. Economic problems in Europe and Asia helped American firms become more competitive in the international market. And the computer revolution and the application of information technology boosted productivity.

The Booming Economy of the 1990s

> The Booming Economy of the 1990s

  • Gross domestic product grew by more than one-third.
  • Thirteen million new jobs were created.
  • Inflation remained in check.
  • Unemployment dropped to 4 percent.
  • The stock market soared.
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FIGURE 31.1 The Growth of Inequality: Changes in Family Income, 1969–1998
For most of the post–World War II period, income increased for all groups on the economic ladder. But after 1979, the income of the poorest families actually declined, while the income of the richest 20 percent of the population grew substantially. Adapted from the New York Times, 1989.

People at all income levels benefited from the economic boom, but income inequality, rising since the 1970s, endured (Figure 31.1). The growing use of computer technology increased demand for highly skilled workers, while the movement of manufacturing jobs abroad diminished opportunities and wages for the less skilled. Moreover, deregulation and the continuing decline of unions hurt lower-skilled workers, tax cuts favored the better-off, and the minimum wage failed to keep up with inflation.

CHAPTER LOCATOR

How did the United States respond to the end of the Cold War and tensions in the Middle East?

How did President Clinton seek a middle ground in American politics?

How did President Clinton respond to the challenges of globalization?

How did President George W. Bush change American politics and foreign policy?

What obstacles stood in the way of President Obama’s reform agenda?

Conclusion: How have Americans debated the role of the government?

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Although more minorities than ever attained middle-class status, people of color overall remained lowest on the economic ladder. For instance, in 1999 the median income for white households surpassed $45,000, but it stood at only $29,423 and $33,676 for African American and Latino households, respectively. In 2000, poverty afflicted more than 20 percent of African Americans and Latinos, in contrast to 7.5 percent of whites.

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