How did the US experience an economic boom in the 1990s? What led to this stronger economic period?

During the 1990s the United States experienced an economic boom in the shape of strong economic growth, steady job creation, and low inflation. Until July 2019, this was the largest recorded economic expansion in American history.

The boom was caused by a number of factors, such as low oil prices, welfare reform, and increased productivity due to developments in information technology.

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At the beginning of the 1990s the American economy was experiencing a period of stagnation. This was the biggest single factor in President George H.W. Bush's defeat in the 1992 presidential election. As the decade progressed, however, the United States experienced something of an economic boom, the likes of which...

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At the beginning of the 1990s the American economy was experiencing a period of stagnation. This was the biggest single factor in President George H.W. Bush's defeat in the 1992 presidential election. As the decade progressed, however, the United States experienced something of an economic boom, the likes of which it would not see again for decades.

First and foremost, the boom manifested itself in a sustained period of low unemployment. In 1994, the economy generated almost 4 million new jobs, a record amount. In the past, such growth in new employment often generated higher demand in the economy, leading to increased inflation. But in the 1990s that didn't happen. The inflation rate remained at a low level throughout the decade, falling as low as 1.6 percent in 1998.

So what were the causes of the boom? One such cause was the relatively low price of oil during this period. Low oil prices significantly reduced manufacturing and transportation costs, leading to economic growth.

Some commentators have also cited the Clinton Administration's welfare reform program as being an important factor in the low unemployment rate. The Personal Responsibility and Work Opportunity Act of 1996 greatly reduced the amount of time that applicants could stay on welfare. In turn, this increased the labor force participation rate, keeping unemployment levels low.

Finally, this was a time of rapid technological advancement particularly in the IT sector of the economy. The information revolution made the economy as a whole more productive and efficient, creating new jobs and driving down costs.

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