That Reagan Boom

Talking with a friend on Facebook over the weekend led me wanting to learn more about a phenom he kept referring to as the Reagan Boom.  I was in infancy and elementary school in the 80s so I don't recall much about how great things were economically back then.  I know my dad had a good job and we never went without but other than that I don't remember much.

With a little spare time today I dug into this great era known as the Reagan Boom that my friend said was filled with economic growth never seen before.

Here's US GDP from the last 80 years or so.

If the Reagan Boom was an era of unprecedented growth due mainly to his policies surely GDP during that time would reflect that right?  Well, as you can see from the graph GDP has been rising since 1942 and it looks no different in the 80s than it did in the 60s, 70s, 90s or 2000s.  In fact the sharpest growths come in the 90s after Reagan was out of office and during the 2003 to 2007 after Reagan was dead.  So dang it, even though GDP grew during the Reagan Boom it's not unprecedented or even in "never seen before" territory. Just normal growth like we've seen for 80 years.

Besides GDP, another great measuring stick to test out good economic times is wages.  Obviously when wages go up, people spend more and the economy grows.  So surely the Reagan Boom had never before seen wage increases.  You know, normal every day Americans making more money-- that's what a boom is all about.

Alright, well, the Reagan Boom for sure saw wage increases but not like what we saw in the 50s and 60s when Reagan was still acting like he was a war hero.  What we do see is that wages had a much better time in the 90s after Reagan left office than during the Reagan Boom.  Now don't get me wrong, wages increased but not into unprecedented territory.  And certainly not greater than they did in the immediate post-war years or during the 90s when Clinton was in office.

So with two of the leading economic indicators there is no boom. There's growth no doubt about that.  But no boom or nothing that suggests there was unprecedented, never before seen growth.  The 90s saw much sharper GDP growth.  And most certainly the 50s, 60s and 90s saw much greater wage growth.  The Reagan Boom looks awful ordinary doesn't it?

Okay, okay, how about productivity?  Surely Reagan oversaw an era of great increases in production.  There's no way Republicans are going around calling the 80s a "boom" when there's no economic evidence to back it up, right?   Well, actually...

Productivity sucked!

What the heck is going on here.  I'm not seeing a boom at all.  It has to be found in the notion that Reagan cut taxes and paid for all his spending.  Has to be...

Well no, that didn't happen either.  Reagan didn't pay for anything. He ended a post-war budget practice of paying for most stuff (that's what the long sloping downward line is starting about 1946 and continuing until 1981).

Nothing is appearing unprecedented or never before seen.  Is it possible the Reagan Boom is simply code for "if we say it enough people will start believing it"?

If someone finds some data in support of the Reagan Boom let me know.  I would really like to learn more about it.

*Update:

Got an email from a friend, a very Republican friend, telling me that Reagan's Boom was more to do with rescuing the nation from a very deep recession, one similar if not worse than today, than it is about having actual data to back it up.

Just one thing wrong with that.  It's not true.

As you can see in the graph below, which I blew up from one above and made the start date 1979 instead of 1947, the loss in GDP in 1979 and then again in 1981 is no where near as severe as in 2008-2009.  In other words, the economy Reagan inherited was stronger than the one Obama inherited. 

There's a huge drop in GDP in 2008-2009.  Barely a smidgen of a drop in the year preceding Reagan and only a slight one after his inauguration.  The drops we recently went through haven't been seen since the 1930s.