NCPA - National Center for Policy Analysis


November 8, 2004

Economic expansion has become the norm in the minds of most Americans due, in no small part, to the fact that since the early 1980s recessions have been relatively rare, says the American Enterprise Institute.

  • Over the past 22 years the U.S. economy has been in recession just 14 months, or 5 percent of the time.
  • From the end of World War II through 1982, the U.S. economy was in recession more than four times as frequently (22.4 percent of the time).

Stimulated by tax cuts and interest rates cuts, the economy has managed to grow by a 3.5 percent annual rate over the past two-and-a-half years. The economy, however, is faced with a number of obstacles to continued expansion:

  • The stimulus from lower taxes and interest rates was largely removed by the middle of this year.
  • The $15 increase in the price of oil has placed an additional drag on the economy, subtracting about one percentage point from growth for the year.

Additionally, the Federal Reserve has raised short-term interest rates over the past few months, which some analysts say will slow economic growth.

Source: John H. Makin, "The Recovery: Three Years On," American Enterprise Institute, October 2004.

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