US Real GDP Growth Rate by Year Compared to Inflation and Unemployment

What Really Influenced U.S. Growth Through History

Updated July 27, 2019

The U.S. GDP growth rate is the percentage change in the 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 use it to decide on the performance of a president or members of Congress.

Comparing Growth by Year

You should also compare growth by year to the unemployment rate by year and inflation by year.

That tells you where you are in the business cycle. Negative growth signals the contraction phase. A recession and high unemployment follow. High growth must occur before unemployment recedes. That begins the expansion phase.

Faster Isn't Always Better

Faster growth isn't always better growth. It must be sustainable. Economists 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.

The Effect in History

The biggest drop in 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%. The highest jobless rate of 24.9% occurred in 1933.

All those records occurred during the contraction phase of the business cycle.

The worst inflation was right after World War II. Prices rose 18.1% in 1946. That happened during the expansion phase of the business cycle.

The chart below shows efforts to stimulate the economy or ward off inflation, whether by the Federal Reserve or by elected officials.

Year	Growth	Unemployment	Inflation	Business Cycle
1929	NA	3.2%	0.6%	Aug peak and Oct. market crash
1930	-8.5%	8.7%	-6.4%	Contraction
1931	-6.4%	15.9%	-9.3%	Contraction
1932	-12.9%	23.6%	-10.3%	Contraction
1933	-1.2%	24.9%	0.8%	New Deal and March trough
1934	10.8%	21.7%	1.5%	Expansion
1935	8.9%	20.1%	3.0%	Expansion
1936	12.9%	16.9%	1.4%	Expansion
1937	5.1%	14.3%	2.9%	May peak
1938	-3.3%	19%	-2.8%	June trough
1939	8.0%	17.2%	0.0%	Expansion and Dust Bowl ended
1940	8.8%	14.6%	0.7%	Expansion and Dust Bowl ended
1941	17.7%	9.9%	9.9%	Expansion and WWII
1942	18.9%	4.7%	9.0%	Expansion
1943	17.0%	1.9%	3.0%	Expansion
1944	8.0%	1.2%	2.3%	Bretton-Woods
1945	-1.0%	1.9%	2.2%	Feb. peak, recession, Oct. trough
1946	-11.6%	3.9%	18.1%	Expansion and Fed cuts
1947	-1.1%	3.9%	8.8%	Marshall Plan and Cold War
1948	4.1%	4%	3.0%	Nov. peak
1949	-0.6%	6.6%	-2.1%	Oct. trough and NATO
1950	8.7%	4.3%	5.9%	Expansion and Korean War
1951	8.0%	3.1%	6.0%	Expansion
1952	4.1%	2.7%	0.8%	Expansion
1953	4.7%	4.5%	0.7%	War ended and July peak
1954	-0.6%	5%	-0.7%	May trough, Dow at 1929 level
1955	7.1%	4.2%	0.4%	Expansion
1956	2.1%	4.2%	3.0%	Expansion
1957	2.1%	5.2%	2.9%	Aug peak
1958	-0.7%	6.2%	1.8%	April trough
1959	6.9%	5.3%	1.7%	Fed raised rates
1960	2.6%	6.6%	1.4%	April peak and Fed cut
1961	2.6%	6%	0.7%	JFK spending and Feb. trough
1962	6.1%	5.5%	1.3%	Cuban Missile Crisis
1963	4.4%	5.5%	1.6%	LBJ spending, Fed raised rate
1964	5.8%	5%	1.0%	Fed raised rate
1965	6.5%	4%	1.9%	Vietnam War, Fed raised rate
1966	6.6%	3.8%	3.5%	Expansion, Fed raised rate
1967	2.7%	3.8%	3.0%	Expansion
1968	4.9%	3.4%	4.7%	Fed raised rate
1969	3.1%	3.5%	6.2%	Nixon, Fed raised rate, Dec. peak
1970	0.2%	6.1%	5.6%	Nov. trough, Fed cut rate
1971	3.3%	6%	3.3%	Expansion and Wage-price controls
1972	5.3%	5.2%	3.4%	Expansion
1973	5.6%	4.9%	8.7%	Vietnam War and gold standard ended, Nov. peak.
1974	-0.5%	7.2%	12.3%	Stagflation, Watergate, Fed raised rate
1975	-0.2%	8.2%	6.9%	March trough, Fed cut rate
1976	5.4%	7.8%	4.9%	Expansion, Fed cut rate
1977	4.6%	6.4%	6.7%	Carter
1978	5.5%	6%	9.0%	Fed raised rate
1979	3.2%	6%	13.3%	Fed raised then lowered rate
1980	-0.3%	7.2%	12.5%	Jan. peak, Fed raised rate, July trough
1981	2.5%	8.5%	8.9%	Reagan, Expansion peaked in July
1982	-1.8%	10.8%	3.8%	Nov. trough, Fed cut rate
1983	4.6%	8.3%	3.8%	Reagan spent on defense
1984	7.2%	7.3%	3.9%	Expansion
1985	4.2%	7%	3.8%	Expansion
1986	3.5%	6.6%	1.1%	Reagan cut taxes
1987	3.5%	5.7%	4.4%	Black Monday
1988	4.2%	5.3%	4.4%	Expansion, Fed raised rate
1989	3.7%	5.4%	4.6%	S&L Crisis
1990	1.9%	6.3%	6.1%	July peak
1991	-0.1%	7.3%	3.1%	March trough
1992	3.5%	7.4%	2.9%	Expansion, Fed cut rate
1993	2.8%	6.5%	2.7%	Expansion
1994	4.0%	5.5%	2.7%	Expansion
1995	2.7%	5.6%	2.5%	Fed raised rate
1996	3.8%	5.4%	3.3%	Fed cut rate
1997	4.4%	4.7%	1.7%	Fed raised rate
1998	4.5%	4.4%	1.6%	LTCM crisis
1999	4.8%	4.0%	2.7%	Expansion
2000	4.1%	3.9%	3.4%	Expansion
2001	1.0%	5.7%	1.6%	March peak, 9/11, and Nov. trough
2002	1.7%	6.0%	2.4%	Expansion
2003	2.9%	5.7%	1.9%	JGTRRA
2004	3.8%	5.4%	3.3%	Expansion
2005	3.5%	4.9%	3.4%	Expansion
2006	2.7%	4.4%	2.5%	Expansion
2007	1.8%	5.0%	4.1%	Dec peak
2008	-0.1%	7.3%	0.1%	Contraction and Financial Crisis.
2009	-2.5%	9.9%	2.7%	June trough
2010	2.6%	9.3%	1.5%	Obamacare and Dodd-Frank
2011	1.6%	8.5%	3.0%	Expansion
2012	2.2%	7.8%	1.7%	Expansion
2013	1.8%	6.7%	1.5%	Expansion
2014	2.5%	5.6%	0.8%	Expansion
2015	2.9%	5.0%	0.7%	Strong dollar, low oil prices, Fed raised rates steadily
2016	1.6%	4.7%	2.1%	Strong dollar, low oil prices, Fed raised rates steadily
2017	2.4%	4.1%	2.1%	Weakening dollar boosted growth
2018	2.9%	3.9%	1.9%	Trump tax plan boosted growth

Note: GDP growth is for the year. The unemployment rate is as of December of that year. The inflation rate is the year-over-year rate as of December of that year.