U.S. GDP Growth Rate by Year Compared to Inflation and Unemployment

What Really Influenced U.S. Growth Through History

workers-at-jobs.jpg
When the U.S. is growing at a healthy rate, it generates enough great jobs for everyone. Photo: Vincent Hazat/Getty Images

The U.S. GDP growth rate by year is the percent change in the gross domestic product from one year to the next. The growth rate history is the best indicator to describe 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.

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 indicates a recession. High unemployment follows. High growth must occur before unemployment recedes.and the phase of the business cycle. Also, efforts to stimulate the economy or ward off inflation are noted, whether by the Federal Reserve or by elected officials. 

Faster growth is not always better growth. That's because it must be sustainable. Economists agree that the ideal GDP growth rate is between 2 percent to 3 percent. Growth needs to be 3 percent 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 biggest drop in growth in U.S. history occurred in 1932. The economy contracted 12.9 percent during the worst year of the Great Depression. The worst deflation occurred that same year. Prices fell 10.3 percent.

The highest jobless rate of 24.9 percent 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 percent in 1946. That happened during the expansion phase of the business cycle.

U.S. Annual GDP Growth Rate Compared Unemployment, Inflation and Business Cycle Phases

YearGDP GrowthUnemployment Rate Inflation  Business Cycle Phase
1929NA3.2%0.6%Aug peak. 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.
1933-1.3%24.9%0.8%New Deal. Mar trough.
193410.8%21.7%1.5%Expansion.
19358.9%20.1%3.0%Expansion.
193612.9%16.9%1.4%Expansion.
19375.1%14.3%2.9%May peak. 
1938-3.3%19%-2.8%Jun trough.
19398.0%17.2%0.0%

Expansion.

Dust Bowl ended.

19408.8%14.6%0.7%
194117.7%9.9%9.9%Expansion. WWII.
194218.9%4.7%9.0%Expansion.
194317.0%1.9%3.0%Expansion.
19448.0%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. Fed cuts.
1947-1.1%3.9%8.8%Marshall Plan. Cold War.
19484.1%4%3.0%Nov peak.
1949-0.5%6.6%-2.1%Oct trough. NATO
19508.7%4.3%5.9%Expansion. Korean War.
19518.1%3.1%6.0%Expansion.
19524.1%2.7%0.8%Expansion.
19534.7%4.5%0.7%War ended. July peak.
1954-0.6%5%-0.7%May trough. Dow at 1929 level.
19557.1%4.2%0.4%Expansion.
19562.1%4.2%3.0%Expansion.
19572.1%5.2%2.9%Aug peak.
1958-0.7%6.2%1.8%April trough.
19596.9%5.3%1.7%Fed raised rates.
19602.6%6.6%1.4%April peak. Fed cut.
19612.6%6%0.7%JFK spending. Feb trough. 
19626.1%5.5%1.3%Cuban Missile Crisis.
19634.4%5.5%1.6%LBJ spending. Fed raised rate.
19645.8%5%1.0%Fed raised rate.
19656.5%4%1.9%Vietnam War. Fed raised rate.
19666.6%3.8%3.5%Expansion. Fed raised rate.
19672.7%3.8%3.0%Expansion.
19684.9%3.4%4.7%Fed raised rate.
19693.1%3.5%6.2%Nixon. Fed raised rate. Dec peak.
19700.2%6.1%5.6%Nov trough. Fed cut rate.
19713.3%6%3.3%Expansion. Wage-price controls.
19725.2%5.2%3.4%Expansion.
19735.6%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%Mar trough. Fed cut rate.
19765.4%7.8%4.9%Expansion. Fed cut rate..
19774.6%6.4%6.7%Carter.
19785.6%6%9.0%Fed raised rate..
19793.2%6%13.3%Fed raised then lowered rate. 
1980-0.2%7.2%12.5%Jan peak. Fed raised rate. July trough. 
19812.6%8.5%8.9%Reagan. Fed raised and cut rate. Expansion peaked in July.
1982-1.9%10.8%3.8%Nov trough. Fed cut rate.
19834.6%8.3%3.8%Reagan spent on defense.
19847.3%7.3%3.9%Expansion.
19854.2%7%3.8%Expansion.
19863.5%6.6%1.1%Reagan cut taxes.
19873.5%5.7%4.4%Black Monday.
19884.2%5.3%4.4%Expansion. Fed raised rate.
19893.7%5.4%4.6%S&L Crisis
19901.9%6.3%6.1%Jul peak.
1991-0.1%7.3%3.1%Mar trough.
19923.6%7.4%2.9%Expansion. Fed cut rate.
19932.7%6.5%2.7%Expansion.
19944.0%5.5%2.7%Expansion.
19952.7%5.6%2.5%Fed raised rate.
19963.8%5.4%3.3%Fed cut rate.
19974.5%4.7%1.7%Fed raised rate.
19984.5%4.4%1.6%LTCM crisis.
19994.7%4.0%2.7%Expansion.
20004.1%3.9%3.4%Expansion.
20011.0%5.7%1.6%Mar peak. 9/11. Nov trough.
20021.8%6.0%2.4%Expansion.
20032.8%5.7%1.9%JGTRRA.
20043.8%5.4%3.3%Expansion.
20053.3%4.9%3.4%Expansion.
20062.7%4.4%2.5%Expansion.
20071.8%5.0%4.1%Dec peak.
2008-0.3%7.3%0.1%Contraction. Financial Crisis.
2009-2.8%9.9%2.7%June trough.
20102.5%9.3%1.5%Obamacare. Dodd-Frank.
20111.6%8.5%3.0%Expansion.
20122.2%7.8%1.7%Expansion.
20131.7%6.7%1.5%Expansion.
20142.6%5.6%0.8%Expansion.
20152.9%5.0%0.7%Strong dollar. Low oil prices. Fed raised rate.
20161.5%4.7%2.1%

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.

Resources for Table

  • BEA, : Table 1.1.1. GDP Growth Rate
  • Historical Fed Funds Rate
  • Recession History
  • BLS,  Note: This divides the number of unemployed into the Labor Force.
  • History of Gold Standard
  • U.S. Census Bureau, Percent of Population that Is Unemployed 1929-1941 Note: This is not measured the same as the BLS Unemployment Rate.
  • Guide to the 20th Century
  • BLS, Historical Inflation Rate
  • NBER, 

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