During Jimmy Carter's last year in office (1980), inflation averaged 12.5%, compared to 4.4% during Reagan's last year in office (1988). Over those eight years, the unemployment rate declined from 7.1% to 5.5%. Reagan implemented policies based on supply-side economics and advocated a classical liberal and laissez-faire philosophy, seeking to stimulate the economy with large, across-the-board tax cuts.
During Reagan's presidency, federal income tax rates were lowered significantly with the signing of the bipartisan Economic Recovery Tax Act of 1981. Real gross domestic product (GDP) growth recovered strongly after the 1982 recession and grew during his eight years in office at an annual rate of 3.4% per year. Unemployment peaked at 10.8% percent in December 1982—higher than any time since the Great Depression—then dropped during the rest of Reagan's presidency. Sixteen million new jobs were created, while inflation significantly decreased.
Some economists agree that Reagan's tax policies invigorated America's economy, such as Nobel Prize winner Milton Friedman, who wrote that the Reagan tax cuts were "one of the most important factors in the boom of the 1990s." Similarly, fellow Nobel Prize winning economist Robert A. Mundell wrote that the tax cuts "made the U.S. economy the motor for the world economy in the 1990s, on which the great revolution in information technology was able to feed
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