The U.S. GDP growth rate is the percentage change in gross domestic product from one year to the next. The growth rate history is the best indicator of a nation's economic growth over time. It’s used to determine the effectiveness of economic policies. Voters may even use it to decide on the performance of a president or members of Congress.
Comparing GDP Growth by Year
When comparing growth by year, it's also helpful to look at the unemployment rate by year and inflation rate by year. That tells you where you are in the business cycle. Negative growth signals the contraction phase. A recession and high unemployment are likely to follow. High growth must occur before unemployment recedes. That begins the expansion phase.
For example, there was lots of expansion between 2010 and 2020. The Fed raised interest rates and the stock market hit new highs. However, then the U.S. hit a recession in February 2020. This led to high unemployment rates and a large contraction with negative GDP. As the U.S. recovered, inflation began to rise. These three factors of economic health are all intertwined.
Is Fast GDP Growth Good for the Economy?
Faster growth isn't always better growth. It must be sustainable. Economists often agree that the ideal GDP growth rate is between 2% and 3%. Growth needs to be at 3% to maintain a natural rate of unemployment. But you don't want growth to be too fast. That will create a bubble, which then leads to a recession when it bursts.
GDP Growth Throughout History
The biggest annual drop in GDP growth in U.S. history occurred in 1932. The economy contracted -12.9% during the worst year of the Great Depression. The worst deflation occurred that same year. Prices fell 10.3%. And by 1933, the unemployment rate was the highest in history at 24.9%.
Record GDP growth or contraction, unemployment rates, and inflation usually occur during recessions or the contraction phase of the business cycle.
The worst inflation in modern times was right after World War II. Prices rose 18.1% in 1946. That happened during the expansion phase of the business cycle.
GDP Growth, Inflation, and Unemployment by Year
The table below shows how GDP, inflation, and unemployment rates have changed each year since 1929. GDP is the annual rate and inflation is for December of that year and is the year-over-year rate. The unemployment rate is as of December that year. Unemployment rates for the years 1929 through 1947 were calculated from a different BLS source as current BLS data only goes back to 1948. You'll also find notes for events that happened each year, or which phase of the business cycle the economy was in at that year.
Year | Annual GDP Growth | Inflation (December, YOY) | Unemployment Rate (December) | Business Cycle and Notable Events |
---|---|---|---|---|
1929 | N/A | 0.6% | 3.2% | August peak and October market crash |
1930 | -8.5% | -6.4% | 8.7% | Contraction |
1931 | -6.4% | -9.3% | 15.9% | Contraction |
1932 | -12.9% | -10.3% | 23.6% | Contraction |
1933 | -1.2% | 0.8% | 24.9% | New Deal and March trough |
1934 | 10.8% | 1.5% | 21.7% | Expansion |
1935 | 8.9% | 3.0% | 20.1% | Expansion |
1936 | 12.9% | 1.4% | 16.9% | Expansion |
1937 | 5.1% | 2.9% | 14.3% | May peak |
1938 | -3.3% | -2.8% | 19.0% | June trough |
1939 | 8.0% | 0% | 17.2% | Expansion and Dust Bowl ended |
1940 | 8.8% | 0.7% | 14.6% | Expansion |
1941 | 17.7% | 9.9% | 9.9% | Expansion and WWII |
1942 | 18.9% | 9.0% | 4.7% | Expansion |
1943 | 17.0% | 3.0% | 1.9% | Expansion |
1944 | 8.0% | 2.3% | 1.2% | Bretton Woods |
1945 | -1.0% | 2.2% | 1.9% | February peak, recession, October trough |
1946 | -11.6% | 18.1% | 3.9% | Expansion and Fed cuts |
1947 | -1.1% | 8.8% | 3.6% | Marshall Plan and Cold War |
1948 | 4.1% | 3.0% | 4.0% | November peak |
1949 | -0.6% | -2.1% | 6.6% | October trough and NATO |
1950 | 8.7% | 5.9% | 4.3% | Expansion and Korean War |
1951 | 8.0% | 6.0% | 3.1% | Expansion |
1952 | 4.1% | 0.8% | 2.7% | Expansion |
1953 | 4.7% | 0.7% | 4.5% | Korean War ended and July peak |
1954 | -0.6% | -0.7% | 5.0% | May trough, Dow at 1929 level |
1955 | 7.1% | 0.4% | 4.2% | Expansion |
1956 | 2.1% | 3.0% | 4.2% | Expansion |
1957 | 2.1% | 2.9% | 5.2% | August peak |
1958 | -0.7% | 1.8% | 6.2% | April trough |
1959 | 6.9% | 1.7% | 5.3% | Fed raised rates |
1960 | 2.6% | 1.4% | 6.6% | April peak and Fed cut |
1961 | 2.6% | 0.7% | 6.0% | JFK spending and February trough |
1962 | 6.1% | 1.3% | 5.5% | Cuban Missile Crisis |
1963 | 4.4% | 1.6% | 5.5% | LBJ spending, Fed raised rates |
1964 | 5.8% | 1.0% | 5.0% | Fed raised rate |
1965 | 6.5% | 1.9% | 4.0% | Vietnam War, Fed raised rates |
1966 | 6.6% | 3.5% | 3.8% | Expansion, Fed raised rates |
1967 | 2.7% | 3.0% | 3.8% | Expansion |
1968 | 4.9% | 4.7% | 3.4% | Fed raised rates |
1969 | 3.1% | 6.2% | 3.5% | Nixon, Fed raised rates, December peak |
1970 | 0.2% | 5.6% | 6.1% | November trough, Fed cut rates |
1971 | 3.3% | 3.3% | 6.0% | Expansion and wage-price controls |
1972 | 5.3% | 3.4% | 5.2% | Expansion |
1973 | 5.6% | 8.7% | 4.9% | Vietnam War and gold standard ended, November peak. |
1974 | -0.5% | 12.3% | 7.2% | Stagflation, Watergate, Fed raised rates |
1975 | -0.2% | 6.9% | 8.2% | March trough, Fed cut rates |
1976 | 5.4% | 4.9% | 7.8% | Expansion, Fed cut rates |
1977 | 4.6% | 6.7% | 6.4% | Carter took office |
1978 | 5.5% | 9.0% | 6.0% | Fed raised rates |
1979 | 3.2% | 13.3% | 6.0% | Fed raised then lowered rate |
1980 | -0.3% | 12.5% | 7.2% | Januart peak, Fed raised rates, July trough |
1981 | 2.5% | 8.9% | 8.5% | Reagan, Expansion peaked in July |
1982 | -1.8% | 3.8% | 10.8% | November trough, Fed cut rates |
1983 | 4.6% | 3.8% | 8.3% | Reagan spent on defense |
1984 | 7.2% | 3.9% | 7.3% | Expansion |
1985 | 4.2% | 3.8% | 7.0% | Expansion |
1986 | 3.5% | 1.1% | 6.6% | Tax cuts |
1987 | 3.5% | 4.4% | 5.7% | Black Monday |
1988 | 4.2% | 4.4% | 5.3% | Expansion, Fed raised rates |
1989 | 3.7% | 4.6% | 5.4% | S&L Crisis |
1990 | 1.9% | 6.1% | 6.3% | July peak |
1991 | -0.1% | 3.1% | 7.3% | March trough |
1992 | 3.5% | 2.9% | 7.4% | Expansion, Fed cut rates |
1993 | 2.8% | 2.7% | 6.5% | Expansion |
1994 | 4.0% | 2.7% | 5.5% | Expansion |
1995 | 2.7% | 2.5% | 5.6% | Fed raised rates |
1996 | 3.8% | 3.3% | 5.4% | Fed cut rate |
1997 | 4.4% | 1.7% | 4.7% | Fed raised rates |
1998 | 4.5% | 1.6% | 4.4% | LTCM crisis |
1999 | 4.8% | 2.7% | 4.0% | Expansion |
2000 | 4.1% | 3.4% | 3.9% | Expansion |
2001 | 1.0% | 1.6% | 5.7% | March peak, 9/11, and November trough |
2002 | 1.7% | 2.4% | 6.0% | Expansion |
2003 | 2.8% | 1.9% | 5.7% | JGTRRA |
2004 | 3.9% | 3.3% | 5.4% | Expansion |
2005 | 3.5% | 3.4% | 4.9% | Expansion |
2006 | 2.8% | 2.5% | 4.4% | Expansion |
2007 | 2.0% | 4.1% | 5.0% | December peak |
2008 | 0.1% | 0.1% | 7.3% | Contraction and Financial Crisis |
2009 | -2.6% | 2.7% | 9.9% | June trough |
2010 | 2.7% | 1.5% | 9.3% | Obamacare and Dodd-Frank |
2011 | 1.5% | 3.0% | 8.5% | Expansion |
2012 | 2.3% | 1.7% | 7.9% | Expansion |
2013 | 1.8% | 1.5% | 6.7% | Expansion |
2014 | 2.3% | 0.8% | 5.6% | Expansion |
2015 | 2.7% | 0.7% | 5.0% | Strong dollar, low oil prices, Fed raised rates steadily |
2016 | 1.7% | 2.1% | 4.7% | Presidential race |
2017 | 2.3% | 2.1% | 4.1% | Weakening dollar boosted growth |
2018 | 2.9% | 1.9% | 3.9% | Trump tax plan boosted growth |
2019 | 2.3% | 2.3% | 3.6% | Goldilocks economy |
2020 | -3.4% | 1.4% | 6.7% | February peak before recession |
2021 | 5.7% | 7.0% | 3.9% | Recovery, resettling after new strains of coronavirus |
Frequently Asked Questions (FAQs)
Why is GDP a good measure of economic growth?
In general, a steadily growing GDP is a good indicator of the health of a country's economy. When GDP is growing, companies are producing more, which allows them to hire more people. These additional jobs keep more money flowing through the economy, thus improving the overall economic outlook. Likewise, a GDP that's growing too quickly or too slowly—or even contracting—can indicate other economic problems.
Why does inflation increase with GDP growth?
The relationship between GDP growth and inflation is one that has long vexed economists. There isn't a consensus about how much growth the economy can handle before it results in inflation, but most economists agree that, at some point, growth can accelerate too quickly, resulting in runaway inflation. That's why the Federal Reserve uses interest rates to slow down growth when it gets too aggressive.
How does unemployment affect GDP?
Although there are exceptions, economists generally accept Okun's Law, which states that a quickly rising GDP will lead to a drop in unemployment, a major decline in GDP will result in an increase in unemployment, and a relatively stable GDP will result in little change to the unemployment rate.