Cletus C. Coughlin

Daniel L. Thornton

English

Research Papers in Economics

NationalEconomicTrends
March 2000
The Exceptional 1990s
Now that the decade of the 1990s has closed, it is
interesting to compare the economic performance of
the 1990s—which is sometimes viewed as exception-
al—with previous decades.  By comparing macroeco-
nomic results across recent decades, we identify some
areas where the 1990s were exceptional and some
where they were not.
Despite strong economic growth during the latter
part of the decade, the table shows that the average
growth of real GDP during the 1990s was nearly 
equal to that of the 1970s and 1980s, and was sub-
stantially slower than that of the 1960s.  All of these
decades were marked by at least one recession, with
the one during the early 1990s being the mildest.
Contributing to the strong economic growth, labor
productivity growth also accelerated during the latter
half of the decade.  Average labor productivity growth
during the 1990s, however, is very similar to that of
the 1970s and is a full percentage point below that 
of the 1960s.
The 1990s average unemployment rate of 5.8 per-
cent is markedly better than that of the 1980s, but
only slightly lower than that of the 1970s and worse
than the 1960s.  Because the unemployment rate
declined during the decade, employment during the
1990s grew more rapidly than the labor force on aver-
age.  Nevertheless, the 1990s ranked last in employ-
ment growth.  An unusually large number of jobs
were created during the 1990s because total employ-
ment tends to rise over time.  Consequently, a larger
number of jobs can be created even when the growth
rate is lower.  While the number of jobs created dur-
ing the 1990s is exceptional, the growth rate of
employment is not.
Low inflation is one feature of the 1990s that is
often thought to be exceptional; relative to the experi-
ence of the 1970s and 1980s, it clearly is.  Despite
nearly identical average rates of economic growth in
all three decades, the average inflation rate of the
1990s was about half that of the 1970s and 1980s.
Nevertheless, the average inflation rate of the 1990s
was about three-quarters of a percentage point higher
than that of the 1960s.
There are two areas where the experience of the
1990s was clearly exceptional.  The first is the perfor-
mance of the stock market.  The inflation-adjusted
total return to the S&P 500 during the 1990s dwarfed
the returns of the 1960s and 1970s and exceeded the
substantial return of the 1980s by 3 percentage points.
Unlike the 1980s, however, this performance is not
due to the market recovering from a poor performance
in the previous decade.
The 1990s also were exceptional in terms of the sta-
bility of inflation and output growth.  The standard devi-
ations of quarterly real GDP growth and inflation were
1.5 and 1.1 percent for the 1990s.  The same measures
for the next best decade, the 1960s, were 2.1 and 1.5 
percent.  Hence, while the decade of the 1990s is not
exceptional in terms of average rates of inflation and 
output growth, it was an exceptionally stable decade.
—Cletus C. Coughlin
—Daniel L. Thornton
Views expressed do not necessarily reflect official positions of the Federal Reserve System
Macroeconomic Performance by Decade*
Real GDP Growth                        4.4                3.3               3.1               3.1
Labor Productivity Growth           2.9                2.0               1.4               1.9
Employment Growth                   1.9                2.4               1.7               1.3
Unemployment Rate                   4.8                6.2               7.3               5.8
CPI Inflation Rate                       2.3                7.1               5.6               3.0
S&P Real Total Returns                6.6               -0.5             12.9             15.9
* The figures, in percent, are quarterly averages.  The growth rate calculations are 
based on year-over-year quarterly data.
1960s   1970s   1980s   1990s

The exceptional 1990s

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The exceptional 1990s

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