U.S ECONOMIC ERAS 2
Five Eras of the U.S Economy
The national economy of a country is measured in terms of the growth of the total locally
produced goods and services. It is also referred to as gross domestic product (GDP). A year in
production cycle normally has two phases namely; the depression phase and the expansion
phase. The expansion phase exhibits growth in the economy in terms of creation of employment
opportunities and increased expenditure while the depression phase entails decrease in
productivity, unemployment and lowered general expenditure by the government. According to
(Henry & Turner, 2016), The United States has experiences varying gross domestic production
cycles from 1945 depending on external factors that affect the economic productivity of the
country. Such external factors include World Wars, natural disasters and human made activities
like politics. The US economy experienced a slower growth rate before 1945 with average
distribution between the expansion and depression phases. However, the era after 1945
experience a faster growth rate with higher job creation and increased expenditure and
investments.
The US economic era of 1970s experienced high oil prices and crop failure globally. The
two factors led to reduced GDP and inflation. An attempt by government to stimulate aggregate
demand by increasing expenditure would increase inflation due to lower supply (Henry &
Turner, 2016).
The 1980s era experienced stimulated supply by government cutting tax on supply that
would be recovered from increased tax. Henry and Turner, (2016) illustrated the government
expenditure increased faster than revenue from tax leading tax revenue deficit in 1990s. The
