The United States

Abstract

‘Whatever one’s view about the relative importance of price stability, high unemployment, and economic growth, there is general agreement that the economy did not perform well with respect to any of these goals during the 1970s.’ Sawhill and Stone (1984, p.72) thus summarise the challenge for the economic policy of the incoming Reagan administration. A quick look at some central economic indicators shows the extent of the stagflation problem, which had come to dominate the economic policy debate by the end of the 1970s. Monetary stability as well as economic growth and employment improved considerably after 1983. But the external situation of the US economy, which also had been deteriorating throughout the 1970s, became increasingly the focus of public alarm. Year after year, the trade balance showed new record deficits and the US, which had been the world’s most important net exporter of capital in the 1950s and 1960s, came to be considered the world’s largest debtor country by the end of the 1980s.¹