Should the 1990s be called “The Great Expansion?”
Expansions represent the upward phase of the business cycle. As such, they occur with the same regularity and the same periodicity as recessions, about every nine years. They correlate to several factors existing in the economy: available credit, plentiful labor, and benign inflation (although low inflation is not a requirement). Expansions are typically longer than contractions (recessions), per the National Bureau of Economic Research (NBER) data. An expansion is harder to detect, as people don’t usually see its immediate effects, as they would with layoffs in a recession. Both recessions and expansions have definitions based on the direction of GDP (a percentage increase smaller or greater than in the last quarter).
The 1990s saw the longest peacetime economic expansion in US history. Several economic factors combined to make this one of America’s greatest decades. It was marked by low inflation and low unemployment. It was a time of increasing worker productivity and the application of technology to the country’s problems. The Internet had a lot to do with this, especially during the latter half of the decade. It also had a lot to do with how computers became an integral part of everyday life. At the turn of the 1990s, a new invention, the World Wide Web, was unveiled when Tim Berners-Lee created the first web page in 1990. By 1992, the term “surfing the internet” was coined by Jean A. Polly.[1]
The closest era in modern economic history that can come to the 1990s would be the Roaring 20’s (1920s). The Roaring ‘20s was a time of extravagance and excess. World War I was an unpleasant memory, and World War II had yet to unfold. It was a period when America was enjoying its first successes on the international stage, having survived the war with little impact to the country’s resources and becoming recognized as a financial leader. The prescient moves by US Treasury Secretary and first Federal Reserve Board chairman William G. McAdoo had kept the dollar fixed to gold and successfully ensconced gold as the international money standard.[2] This allowed the US currency to be seen as a legitimate alternative to the British pound and increased the global view of America as a financially sound and stable trading partner.
Looking back on the 1990s and comparing it to the other business expansion periods that I have experienced in my life, I would have to conclude that, to me, the 1990s “felt like” the most economically progressive and positive that I can remember. I’m not old enough to know what the 1950s were like, nor do I remember what the 1960s were like, but looking back on my experience from the 1970s, 1980s, and 2000s, those expansions don’t seem as powerful. In particular, this decade’s recovery from the 2008 financial crisis seems weak and prolonged.
We have all heard about The Great Inflation, The Great Depression, and The Great Recession. Others have coined all these terms, and all these historical events have a place in the collective memory of the nation. Most memorable, probably because it is most recent, is the Great Recession. Why aren’t the opposite effects written about or memorialized? Why not call the 1990s “The Great Expansion” – as it should be remembered?
[1] The American President, A Complete History, by Kathryn Moore, 2007, Fall River Press, New York, New York, page 584
[2] When Washington Shut Down Wall Street, The Great Financial Crisis of 1914 and the Origins of America’s Monetary Supremacy, by William L. Silber, 2007, Princeton University Press, Princeton, New Jersey, page 6