Economic Policy

Abstract

By early 1998, the economy of the United States was performing at a level that surpassed the expectations of even the most optimistic analysts. High levels of economic growth, the lowest level of unemployment for over two decades, a dollar stable or even increasing in value compared to other major currencies, the stock market reaching numerous record highs, and an inflation rate near zero combined for one of the best economic pictures in years (see Table 10.1). The only dark spot in this otherwise agreeable economic picture was the continuing problem of a huge balance of payments deficit. President Clinton ran for office in 1992 using the phrase “Its the economy, stupid” to guide the campaign, and in 1998 he was presiding over one of the best periods of economic performance in recent memory. This successful position was solidified by the negotiation of a balanced budget and tax reform agreement between the president and the Republicans in Congress, an agreement that may help institutionalize this positive economic performance.