Fortunly’s Annotated Guide to a Century of US GDP by Year

Written By
Julija A.
March 08,2022

Gross domestic product is a handy snapshot for assessing economic health. Year-over-year comparisons provide useful metrics for understanding how vigorously the economy is expanding or whether it is experiencing a recession.

Measured in dollars, America’s GDP is the sum of personal and public consumption, public and private investments, government spending, and exports minus imports. It establishes America as the world’s largest economy.

We’ve summarized a century of US GDP by year in a big quick-reference table.

Because political policies, world events, natural disasters, and other events can influence GDP, we’ve pulled together an exhaustive, in-depth overview of the last 100 years of the American economy. Everything is divided into sections according to historic events that had a big impact on the economy, and each section gives you a timetable to make it easier to understand what happened.

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US GDP by year (1920-2018)

Year Nominal GDP Real GDP % Change
1920 N/A 0.67 N/A
1921 N/A 0.67 0.00%
1922 N/A 0.71 5.97%
1923 N/A 0.8 12.68%
1924 N/A 0.83 3.75%
1925 N/A 0.85 2.41%
1926 N/A 0.9 5.88%
1927 N/A 0.91 1.11%
1928 N/A 0.92 1.10%
1929 $0.11 $0.98 6.52%
1930 $0.09 $1.02 -8.50%
1931 $0.08 $0.95 -6.40%
1932 $0.06 $0.83 -12.90%
1933 $0.06 $0.82 -1.20%
1934 $0.07 $0.91 10.80%
1935 $0.07 $0.99 8.90%
1936 $0.09 $1.11 12.90%
1937 $0.09 $1.17 5.10%
1938 $0.09 $1.13 -3.30%
1939 $0.09 $1.22 8.00%
1940 $0.10 $1.33 8.80%
1941 $0.13 $1.57 17.70%
1942 $0.17 $1.86 18.90%
1943 $0.20 $2.18 17.00%
1944 $0.22 $2.35 8.00%
1945 $0.23 $2.33 -1.00%
1946 $0.23 $2.06 -11.60%
1947 $0.25 $2.04 -1.10%
1948 $0.28 $2.12 4.10%
1949 $0.27 $2.11 -0.60%
1950 $0.30 $2.29 8.70%
1951 $0.35 $2.47 8.00%
1952 $0.37 $2.58 4.10%
1953 $0.39 $2.70 4.70%
1954 $0.39 $2.68 -0.60%
1955 $0.43 $2.87 7.10%
1956 $0.45 $2.93 2.10%
1957 $0.47 $2.99 2.10%
1958 $0.48 $2.97 -0.70%
1959 $0.52 $3.18 6.90%
1960 $0.54 $3.26 2.60%
1961 $0.56 $3.34 2.60%
1962 $0.60 $3.55 6.10%
1963 $0.64 $3.70 4.40%
1964 $0.69 $3.92 5.80%
1965 $0.74 $4.17 6.50%
1966 $0.81 $4.45 6.60%
1967 $0.86 $4.57 2.70%
1968 $0.94 $4.79 4.90%
1969 $1.02 $4.94 3.10%
1970 $1.07 $4.95 0.20%
1971 $1.17 $5.11 3.30%
1972 $1.28 $5.38 5.30%
1973 $1.43 $5.69 5.60%
1974 $1.55 $5.66 -0.50%
1975 $1.69 $5.65 -0.20%
1976 $1.87 $5.95 5.40%
1977 $2.08 $6.22 4.60%
1978 $2,352 $6,569 5.50%
1979 $2.63 $6.78 3.20%
1980 $2.86 $6.76 -0.30%
1981 $3.21 $6.93 2.50%
1982 $3.34 $6.81 -1.80%
1983 $3.63 $7.12 4.60%
1984 $4.04 $7.63 7.20%
1985 $4.34 $7.95 4.20%
1986 $4.58 $8.23 3.50%
1987 $4.86 $8.51 3.50%
1988 $5.24 $8.87 4.20%
1989 $5.64 $9.19 3.70%
1990 $5.96 $9.37 1.90%
1991 $6.16 $9.36 -0.10%
1992 $6.52 $9.69 3.50%
1993 $6.86 $9.95 2.80%
1994 $7.29 $10.35 4.00%
1995 $7.64 $10.63 2.70%
1996 $8.07 $11.03 3.80%
1997 $8.58 $11.52 4.40%
1998 $9.06 $12.04 4.50%
1999 $9.63 $12.61 4.80%
2000 $10.25 $13.13 4.10%
2001 $10.58 $13.26 1.00%
2002 $10.94 $13.49 1.70%
2003 $11.46 $13.88 2.90%
2004 $12.21 $14.41 3.80%
2005 $13.04 $14.91 3.50%
2006 $13.82 $15.34 2.90%
2007 $14.45 $15.63 1.90%
2008 $14.71 $15.61 -0.10%
2009 $14.45 $15.21 -2.50%
2010 $14.99 $15.60 2.60%
2011 $15.54 $15.84 1.60%
2012 $16.20 $16.20 2.20%
2013 $16.79 $16.50 1.80%
2014 $17.52 $16.90 2.50%
2015 $18.22 $17.39 2.90%
2016 $18.71 $17.66 1.60%
2017 $19.49 $18.05 2.20%
2018 $20.49 $18.57 2.90%

1920–1939: The Roaring Twenties and the Great Depression

The Great Depression was the worst economic period in American history. US real GDP growth by year took a nosedive and the whole country was plunged into despair, with thousands of people losing their jobs and their fortunes.

It’s difficult to pin down one event as the cause of this severe economic downturn. Multiple factors coalesced and pushed the Western World into a state of chaos. 

1920–1928: The Roaring Twenties. The nation is experiencing economic growth as GDP grows by 42%, new construction almost doubles, and the stock market rises in value by 20% per year. Everyone from reckless business magnates to dusty coal miners are putting their investments into stocks. GDP by year shows steady growth. 

1929: October 24: Black Thursday. The Dow Jones Industrial Average drops by 11%. Investors panic and start selling their shares. By October 28 - Black Monday - stocks have fallen a further 13%, and Wall Street is in an uproar. The Dow will continue to fall over the next three years, shattering people’s trust in banks and the government. Many seek stability by pulling their money out of banks and the market, exchanging it for gold. Before 1933 there will be four major runs on US banks.

US economy growth, robust for  most of the decade, begins to stall. Income inequality becomes apparent. The top 1% are earning 19.6% of the nation’s entire income, and despite the abundance of money, worker salaries don’t rise commensurate with corporate profits. There are more products than ever, yet there’s no one to buy them as American corporate greed takes its toll on the economy. 

1930: The GDP falls by 8.5% and the Smoot-Hawley Tariff Act is passed. Sponsored by Senator Reed Smoot and Representative Willis C. Hawley, the act increases tariffs on more than 20,000 imported goods. Intended to protect farmers from overseas competition, the act causes other countries to raise tariffs on American exports - aggravating the problem it was intended to solve.

1931: US GDP by year falls another 6.4%. The Dust Bowl — the worst drought in the history of North America — obliterates crops, suffocates livestock, and causes pneumonia in children. Unsustainable farming practices exacerbate the natural disaster and cause agricultural production to plummet. 

1932: The GDP drops by 12.9%. President Herbert Hoover attempts to reduce the deficit and balance the federal budget through raising taxes. With the top income tax boosted to 63%, the plan backfires — people have even less spending power. The economy stagnates. 

1933: Unemployment rises to a historic 25%, and US real GDP by year drops by another 1.2%. Franklin D. Roosevelt replaces Hoover in the White House and immediately begins work on the New Deal, a series of financial reforms and public-work projects meant to help the country recover from the Great Depression. With the help of his secretary of labor, Frances Perkins, they manage to stabilize the banks (Emergency Banking Act), raise federal revenue by ending Prohibition (Beer-Wine Revenue Act), stabilize the dollar by abandoning the gold standard temporarily, save farms and homes from foreclosure by providing loans (Emergency Farm Mortgage Act and Home Owners Refinancing Act), and provide more jobs by creating the Civilian Conservation Corps. The National Industrial Recovery Act is also signed into law. Besides adding more jobs, it limits the workday to eight hours, outlaws child labor, and establishes a national minimum wage. 

And then one more: The Glass-Steagall act separates commercial and investment banks to prevent commercial banks from making risky investments and issuing unsound loans. 

1934–1935: The GDP keeps rising as Roosevelt makes even more social and financial reforms to transform the economy. The Social Security Act is signed into law, providing retirement income for workers aged 65 and older. The Soil Conservation Act teaches farmers how to work the soil in a more sustainable manner. Unemployment drops further as 8.5 million workers are hired to build roads, buildings, and bridges, and the National Labor Relations Act protects workers’ rights to organize and engage in collective bargaining. The National Industrial Recovery Act is declared unconstitutional by the Supreme Court but the New Deal juggernaut is barely slowed. 

1936–1939: Heat and drought are becoming unbearable as temperatures rise above 120 degrees across great swathes of North America. GDP growth by year in the US slows down as Roosevelt raises taxes, but the third wave of the New Deal brings more changes to the table. Electricity is brought to rural areas across America, and the Farm Security Administration is formed to train farmers and provide loans. FDR signs the Wagner-Steagall Act to fund state-run projects that raise the quality of housing. In 1938, the Fair Labor Standards Act re-establishes minimum wage, employment standards, and overtime pay standards that were struck down with the National Industrial Recovery Act. In 1939, the Federal Security Agency is launched to administer Roosevelt’s Social Security program. The Dust Bowl ends and World War II begins. 


1939–1945: World War II

As the deadliest conflict in human history, World War II was exceptionally good for positive US GDP changes by year. With over 72,000,000 casualties worldwide and 308,933 from the US alone, it left a profound impact on the population and changed the face of the earth. This wide-reaching catastrophe also transformed the American economy and dragged the country out of the Great Depression. 

1939: World War II begins. There’s an immediate 8% bump in yearly GDP growth. America starts crafting war supplies for the Allies, producing about $106 billion worth of ammunition over the course of the war. With Allied ammunition expenditures totaling $204.4 billion, this means that more than half of all combat munitions come from the US alone. America resists calls to enter what it sees as a European war.

1940: Real GDP growth is 8.8%. The government starts issuing war bonds to gather capital for war production. Roosevelt is selling steel, ships, weapons, and aircraft to Britain and France, but he still has no intention of entering the war. 

1941: Factories open all over the country and the unemployment slowly drops to 14.6%. GDP grows by 17.7%, and the economy improves steadily, but then the unexpected happens — on December 7, Japan attacks Pearl Harbor. America finally enters the war. 

1942: US GDP year by year keeps growing, making an 18.9% jump compared to 1941. Roosevelt establishes a war mobilization agency to push companies into manufacturing war goods instead of consumer goods, and auto companies start converting their efforts into full war production. Civilian and military leaders enter the “feasibility dispute,” in which they argue about the extent to which the American economy should focus on military production. Donald Nelson, the director of the War Production Board, manages to convince the military to scale back demands that would put a strain on the economy 

1943: Annual US GDP growth by year rises by another 17%. War-related production leaps from 2% of America’s gross national product to 40%. Massive migrations clog roads along rural-urban axes as people move to production-center locations. Unemployment rates hit an all-time low at 1.9%. The Allies slowly start turning the tide in their favor. 

1944: War production reaches its peak, and GDP grows by another 8%. The average income tax rate rises to 20.9%. The US dollar becomes a global currency as the Bretton Woods Agreement is signed by 44 allied nations, and the World Bank and the International Monetary Fund are established. Countries attending the Bretton Woods Conference agree to abandon the gold standard and redeem their currency for US dollars. Why dollars? Because America holds three-quarters of the world’s supply of gold. Other countries can stabilize their currencies through the war years by maintaining a fixed exchange rate between their currencies and the dollar.

1945: The US GDP rate by year drops by 1%. Franklin D. Roosevelt dies and is replaced by his vice president, Harry Truman. The $2 billion ($23 billion in today’s dollars) undertaking known as the Manhattan Project is finished and America is now in possession of nuclear weapons. Even though Hitler is defeated and the war in Europe is winding to an end, the Japanese refuse to surrender. The US drops atomic bombs on Hiroshima and Nagasaki, effectively crushing Japanese resistance and ending the war. America takes its place as one of the world’s dominant nations.


1947–1991: Containing Communism 

The Cold War was a very long period of political tension between America and the Soviet Union after World War II. While it led to a victory over communism, it changed the US debt to GDP ratio year by year and led to great socio-economic consequences for America and the USSR. 

1947–1953: President Harry Truman introduces the Truman Doctrine, which is meant to limit the spread of communism as tensions rise between the Soviets and America. World War II is followed by a recession as government war-time expenditures are curtailed. The recession is exacerbated by Truman’s budget cuts. The GDP is generally unsteady, stabilizing only when the Korean War starts. The country is investing a lot of money in its nuclear arsenal, and USSR responds by doing the same. 

1953–1962: The Korean War ends, resulting in a 0.6% drop of GDP by year in the US. Joseph Stalin dies, but the fear of communism doesn’t dissipate. Dwight D. Eisenhower is elected president, and his policies lead to a period of relative prosperity. He strengthens the Social Security program, increases the minimum wage, and builds the Interstate Highway System. Economic growth is interspersed with recessions, but overall the economy remains relatively stable. The year 1957 marks a turn: The USSR launches Sputnik 1, the first artificial satellite, inaugurating the Space Race. In 1961, John F. Kennedy is elected president.

1962–1979: Kennedy’s deficit spending ends the recession and the US deficit vs GDP by year starts stabilizing. In 1962, the Cold War reaches its peak with the Cuban Missile Crisis. The discovery of USSR ballistic missiles on Cuban soil nearly pushes the two countries into a full-blown nuclear war, but the crisis is quickly averted. Kennedy spends only two years in office before he is assassinated, but the economy remains steady. He is succeeded by Lyndon B. Johnson, who introduces a federally funded medical insurance program, Medicare, that further boosts the economy. America is concerned about the spread of communism in Indo-China, and American military intervention in Vietnam blossoms into war despite Johnson’s opposition. America gains the upper hand in the Space Race, landing a man on the moon in 1969. 

Richard Nixon takes office in 1969, and despite the relatively steady US GDP by year, the rest of the decade is followed by economic turmoil that spawned long-lasting changes in America’s financial system. Between Nixon’s policies, the raging Vietnam War, and the Sino-Soviet split, the Cold War enters a detente phase as each country struggles with its own problems. 

1979–1985: America denounces the Soviet invasion of Afghanistan. The Federal Reserve raises the prime rate to 20% in an attempt to stop inflation amid the rising tensions and economic strain of the post-Vietnam period. Jimmy Carter is president and GDP history shows a period of recession and general instability. Ronald Regan takes office in 1981 and immediately introduces new tax cuts to spur economic growth. The recession slowly ends as America begins aggressively investing in nuclear arms production. 

1985–1991: Tension start winding down again as Mikhail Gorbachev takes office and the USSR starts crumbling. Reagan and Gorbachev negotiate the Intermediate-Range Nuclear Forces Treaty, in which both countries agree to eliminate big portions of their nuclear weapons. When it comes to US GDP by year, a graph shows that the economy is fairly steady.

Reagan and Gorbachev meet for summits over several years, and in 1987, Reagan challenges Gorbachev to tear down the Berlin Wall. The wall falls in 1989. Gorbachev and the newly elected George H.W. Bush meet on Malta to further normalize relations and discuss the reunification of Germany. America is going through a recession, but the USSR dissolves, and in 1991 the Cold War ends. 


1970s: The Great Inflation and Abandoning the Gold Standard

The seventies were the worst decade for GDP growth by year since the Great Depression. The period from 1965–1982 is often referred to as the Great Inflation because of the economic turmoil it caused. Between unprecedented wage and price controls, energy shortages, and four recessions, the country barely had a chance to recover before the next disaster hit. This was also the decade America abandoned the gold standard for good. 

1970–1971: The country is in recession and Richard Nixon is the president. The GDP chart shows very slow progress, and the cost of the Vietnam War is devaluing the dollar. Nixon decides to fight inflation with wage-price controls and introduces a 90-day freeze to bypass America’s free-market economy. The move is the equivalent of fighting fire with gasoline, and while it gives a temporary boost to the economy and manages to get Nixon reelected, it ends up contributing to one of the longest and most serious stagflation periods in American history. 

1972–1973: The US GDP chart by year shows that the economy is still in balance in 1972. Nixon does two important things: He ends the Vietnam War and manages to establish trade negotiations with China, giving a little more stability to the financial system. However, his next moves manage to put the whole country at risk.

In 1973, following unsuccessful Egyptian and Syrian attacks on Israel during the Yom Kippur War, the Organization of Petroleum Exporting Countries cuts oil production by 5% and imposes limits on oil deliveries to Israel’s allies. From October 1973 to March 1974 the price of oil jumps from $2.90 to $11.65 per barrel. The oil crisis boosts inflation, which had already been running at 10%, by imposing increased costs on any business that transported raw materials or goods.

Nixon imposes a 10% tariff on imports to lower the balance of trade and protect domestic industries. He ends the gold standard and abolishes the Bretton Wood system. By divorcing the dollar from gold, Nixon causes the precious metal’s price to skyrocket and the dollar to plummet. Import prices increase and US economic growth by year slows to a crawl. 

Companies can’t raise their prices to remain profitable or lower them to increase demand. They can’t raise or lower wages. The only solution is to lay off workers. This increases unemployment, which in turn reduces consumer demand and further decelerates the plodding economy. 

1974–1977: Nixon resigns in 1974 due to his involvement in the Watergate scandal. Vice President Gerald Ford assumes the presidency, succeeded by Jimmy Carter. 

The Fed lowers interest rates and the US GDP growth rate by year becomes steady as the country slowly drags itself out of recession – only to plunge into the next one very soon.

1978–1982: The Iranian revolution leads to a second energy crisis in 1979, and oil prices are tripled. The Federal Reserve raises interest rates to 20% in an attempt to stop inflation, but by the summer of 1980, inflation is nearly 14.5%. President Carter signs the Money Control Act, meant to deregulate institutions that accept deposits and improve the control of monetary policy by the Federal Reserve.

The Fed is now using a combination of high interest rates and slow reserve growth to fight inflation, but the country enters another recession. It’s not until 1982 that it ends. 


1980s–2000s: Reaganomics

The policies of President Ronald Reagan fundamentally changed the American economy. GDP historical data shows some growth during his presidency, but the period was far from stable. Reagan’s promises did manage to recuperate the economy, though not to the extent he and his supporters hoped for. Despite this, his economic ideas ended up shaping the last two decades of the twentieth century and they have influenced the decisions of every president who came after him. 

1980–1984: Reagan is in charge. After a devastating period of slow growth and unemployment, economic experts are no longer supporting Keynesian theory, and politicians are pressing for an expansion of the money supply. While Reagan starts his presidency with the country deeply mired in stagflation, he quickly lowers income taxes from 70% to 28% for the top tax bracket. Corporate taxes are also reduced — from 48% to 34%. 

In 1982, Reagan signs the Garn-St. Germain Depository Institutions Act, which allows banks to raise interest rates on savings deposits and reduce loan-to-value ratios. 

1984–1987: The current US GDP remains steady. Throughout his presidency, Reagan brings four new policies intended to further stabilize the country: 

  1. Reduction of domestic spending
  2. Reduction of taxes for businesses, individuals, and investors
  3. Reduction of regulations on business
  4. Support of slower money growth 

Reagan believes that lower corporate taxes leave companies with more money, which they will use to hire more workers at higher wages. This is called “trickle-down theory,” and it hinges on the idea that the whole society benefits from the growth of big companies with plenty of resources. Rich Americans embrace the idea. For a while, the US nominal GDP is relatively stable. 

The stock market hits a new crisis on October 19, 1987, when the Dow Jones Industrial Average drops by 22.61%. This happens because of a newly introduced bill proposing the elimination of the tax deduction for loans used to finance corporate takeovers. The bill is Congress’s way of regulating the market, but Wall Street is afraid and investors sell their stocks. People fear another recession, so the Federal Reserve pumps money into banks. After a short struggle, the market is stabilized.

There are more tax cuts in 1986 and 1987, but they aren’t very effective because taxes are already reasonable.

1988–1991: Reagan reduces bank regulations increases barriers to imports. Unemployment is at 5.3%, and US annual GDP grows by 3.7% in 1989. 

George H.W. Bush takes office as the 1989 Savings & Loans crisis reaches its peak. Changing market conditions, Reagan’s deregulations, and corruption lead to instability in the S&L industry. Once the dust settles, a third of these institutions have fallen. It is revealed that five US senators put pressure on the Federal Home Loan Banking Board to overlook suspicious activities, and are now being accused of improper conduct. 

Because of unsound real estate lending, the country ends up with a $160.1 billion debt, and $124.4 billion of that debt is repaid by US taxpayers between 1986 and 1996. 

In 1990, the country enters another recession as the result of the crisis. GDP growth slows again. 

1992–1994: The country is climbing out of recession, and the US GDP by year in 1992 is 3.5%. 

The Reagan-Bush campaign to create the North American Free Trade Agreement finally comes to fruition. Canada, the United States, and Mexico join together to help North America become a more competitive force in the global marketplace. George H.W. Bush, Mexican President Salinas, and Canadian Prime Minister Brian Mulroney sign the agreement in 1992. The economic alliance is at least in part a response to the Maastricht Treaty that will later create the European Union. 

In 1993, Bill Clinton comes into office. His first budget is the Omnibus Budget Reconciliation Act, also known as Deficit Reduction Act. It raises the top income tax rate from 28% to 36% for corporations that earn over $1 million and cuts down on the number of subsidies they get. By taxing the Social Security benefits of high-income earners, he manages to create the earned income tax credit for incomes under $30,000.

1995–1997: The US nominal GDP during this period has steady growth, but the Fed has to raise interest rates to slow down inflation. The country is relatively stable under Clinton, and in 1996, he introduces another reform, modifying the Temporary Assistance for Needy Families Act with an addendum called the Personal Responsibility and Work Opportunity Reconciliation Act. This addition states that recipients of the program must get a job within two years of receiving assistance and that they can receive payments for a maximum of five years. The new program builds on Reagan’s conviction that welfare programs creates a cycle of poverty, and that the government should provide jobs instead of money to families in need.

1998–1999: The US GDP by year is still steady at this point, but a crisis threatens to cause an imbalance when a hedge fund called Long-Term Capital Management almost goes bankrupt. Due to risky trade practices, this massive hedge fund loses almost all of its investors when its highly leveraged interests begin to fall apart. Since LTCM is a prominent hedge fund with a huge number of investors, the Federal Reserve steps in to prevent complete failure. The Fed spends $3.5 billion in return for 90% ownership of the fund. 

In 1999, 1933’s Glass-Steagall Act repealed. It is meant to consolidate commercial and investment banks through financial holdings, but few banks take advantage of it because they don’t want additional supervision from the Fed. Banks that do, become “too big to fail.” 


2000–2002: Dot-com Bubble 

While the US debt to GDP by year ratio was steady at the beginning of 2000, the dot-com speculative bubble made an impact on the economy that became obvious only in the next few years.

2000–2002: The bubble revolves around speculative investment in internet companies. The internet is becoming more popular, and investors are eager to put their money in any kind of tech operation, regardless of its business model and profitability prospects. From 1994 to 2000 there is a period of extreme growth, followed by a burst of the bubble from 2000 to 2002 when the Nasdaq Composite stock market index crashes. Only 48% of tech companies manage to survive, and more operate only at reduced capacity. More than 200,000 people lose their jobs in Silicon Valley alone. 


2001-2014: 9/11 and the War on Terror

In 2001, US GDP growth by year languished at 1% due to 2000’s tech bubble burst. Soon enough, an even bigger disaster struck: the 9/11 terrorist attack. It marked the beginning of America’s War on Terror and pushed the country into a series of exhausting conflicts. 

2001: Fundamentalist Islamic extremists execute a well-coordinated attack using passenger aircraft as weapons. Planes strike New York’s World Trade Center, causing the collapse of both towers. A third plane crashes into the Pentagon, the headquarters of the United States Defense Department. A fourth never reaches its intended target — later identified as the White House — because passengers intervene. George W. Bush is the President, and he immediately announces a global “War on Terror.” The effects on the US debt to GDP by year will become obvious in upcoming years. 

On Oct. 7, 2001, U.S. and British forces launch the first airstrikes in Afghanistan as they target Al Qaeda and Taliban targets. By the end of the month the ground war has begun, with Britain, Turkey, Germany, Italy, The Netherlands, France, and Poland committed to sending ground troops to Afghanistan.

2002: America vows to fight back against terrorism wherever it is found, sending 9,700 troops to Afghanistan by year’s end. War spending helps boost GDP growth to 1.7%. 

2003–2005: At this point, US GDP official data still shows growth. The George W. Bush administration continues to focus on Iraq as a sponsor of world terror. The world is skeptical – none of the 9/11 terrorists had ties to Iraq. In an effort to rally world support for a planned invasion of Iraq, Bush sends the most trusted man in U.S. government, secretary of state Colin Powell, to the United Nations, where Powell expounds a Bush administration claim later proved untrue: that US intelligence has determined that Iraqi President Saddam Hussein is stockpiling weapons of mass destruction. Powell’s speech rallies sufficient support for Bush to form a coalition of countries in a U.S.-led mission to invade Iraq and depose Hussein. Estimates of Iraqi deaths range from more than 100,000 killed in combat to more than 1 million killed due to war-related causes. War spending helps boost GDP by 2.9% in 2003, 3.8% in 2004, and 3.5% in 2005. 

2006–2009: As the war in Iraq winds down, attention shifts to Afghanistan. Troop levels rise from 20,000 in 2006 to 67,000 in 2009. Production of war materiel is insufficient to boost GDP growth by year in the face of the Great Recession.

2010: Troop levels reach 100,000 in Iraq after President Obama orders an additional 33,000 American troops into the conflict. On August 30, President Obama officially announces an end to combat in Iraq. GDP grows 2.6%.

2011: Taliban leader Osama bin Laden is discovered in Afghanistan and killed by U.S. troops. More than 100,000 combat troops remain in Afghanistan. Obama announces a four-year plan to withdraw troops from Afghanistan and withdraws 10,000 by the end of the year. 

2012–2014: The U.S. continues withdrawing troops from Afghanistan. In December 2014 Obama announces the end of combat operations, though about 16,000 troops remain as advisors to Afghan forces fighting the Taliban, ISIS, and al Qaeda. 

As late as January 2019, there are still 14,000 American troops in Afghanistan. The US debt to GDP ratio remains slow and steady at 1.6% to 2.5% through 2014.

The War on Terror’s contributions to GDP are not solely through government spending as in prior wars. The wars in Iraq and Afghanistan are outsourced to private companies that provide their own soldiers, armaments, and support teams. The U.S. spends at least $138 billion with these contractors over the course of the conflicts.

The U.S. continues to use private contractors to execute the war – largely contractors with close ties to current and former government officials – despite a 2011 report from the U.S. Commission on Wartime Contracting find fraud and waste among contractors has cost the government as much as $60 billion since 2001.


2007–2009: The Great Recession

Also known as the subprime mortgage crisis, the Great Recession was an extended economic downturn that caused one of the most serious worldwide financial crises in recent history. It had a devastating effect on the US nominal GDP by year. Investment, output, and consumption were exceptionally low during this period. The crisis left an impact on people and businesses all around America and the world, and while it lasted a relatively short while, it took much longer for the country to recover.

2001–2006: The housing market is booming. Real estate values are rising, interest rates are plummeting, and the American dream of becoming a homeowner is possible even for disadvantaged families. Those who would otherwise be unable to purchase a home can now afford it thanks to a multitude of banks issuing subpar mortgage loans to people with low incomes and poor credit histories. As the bull market in housing continues, financial institutions rush to secondary real-estate markets as speculative investments.

2007: The US annual GDP is still rising at the beginning of 2007, but the housing market starts slumping. The Dow Jones reaches its historic high at 14,000 points. 

New Century Financial Corp., a company that specializes in subprime mortgages, declares Chapter 11 bankruptcy as a result of the increasing number of borrowers defaulting on their mortgages. Since Federal Home Mortgage Corp. declared it would no longer buy risky subprime mortgages earlier in the year, New Century has no way to sell the mortgages it owns and no way to recoup its losses. Several other companies go under, and housing prices fall even further. Due to a surplus of new homes on the market, homeowners are faced with the fact that their homes are now valued at less than what they owe. 

2008: Real GDP growth drops by 0.1%. In January, the Fed drops interest rates to 3%, and President Bush signs the Economic Stimulus Act, which is meant to provide tax refunds to businesses and individuals. 

On March 16, brokerage firm Bear Stearns collapses and its stocks are sold at $2 per share. The stocks were valued at $30 the day before. On July 11, a mortgage company called IndyMack collapses and its closure results in the loss of over 4,000 jobs.

Several “too big to fail” companies are nearing collapse — Citigroup, Chrysler, General Motors, and AIG. The government has to step in and provide enough funds for these businesses to remain afloat and keep their employees. Most of these funds are made possible by the Troubled Asset Relief Program (TARP), a law signed by President Bush and meant to provide $700 billion of taxpayer funds for the purchase of mortgage-backed securities and other assets from struggling financial institutions.

Quarterly GDP drops from $15.8 to $15.3 trillion and the Fed lowers interest rates to 0% for the first time in its history. 

2009: The GDP drops by 2.5%. The US government is forced to bail out Bank of America by paying $20 billion in federal funds and $100 billion in guarantees for subprime mortgages. 

Barack Obama takes office and immediately approves a $787 billion stimulus package, the American Recovery And Reinvestment Act, which includes tax cuts for citizens and money for schools, green energy, infrastructure restoration, and healthcare. 

The Dow Jones Average is slashed in half, falling to 6,457 points and causing a financial catastrophe for anyone who invested their life savings into stocks. The unemployment rate hits 10% and housing foreclosures hit a record level. 

2010–2012: GDP growth in the U.S. by year is recovering slowly but steadily. The recession ends, technically, in 2009, but the effects of it are felt for years, both in America and around the world. 

In 2010, Obama signs the Dodd–Frank Wall Street Reform and Consumer Protection Act into law in an attempt to give the government more regulatory power over the financial industry. It’s not until 2012 that the Dow climbs to a new historic high at 15,658 points, indicating that the country is finally back on its feet. 


2009–2019: Where We Stand Now (Obama and Trump) 

Examining recent historical events is always a tough job. Not enough time has passed for any of us to gain a good perspective on how current events are shaping the world, and for the most part, we can only speculate about what the future might bring. While the last 10 years show slow growth of GDP over time and a somewhat stable economy, political differences are dividing the country in a way we’ve never faced before.

2009–2012: Obama’s first executive order is to close the Guantanamo Bay military detention center within one year. He is met with strong opposition from Congress and his Guantanamo Bay promise is never fulfilled. 

During his first year in office Obama signs several major bills: The Lilly Ledbetter Fair Pay Act, the American Recovery and Reinvestment Act, and the Hate Crimes Prevention Act. The first is meant to address the wage gap between men and women, the second is meant to provide jobs and ease the burden of the Great Recession, and the last is meant to make it easier to prosecute hate crimes effectively.

In 2010, US GDP by year finally starts recovering and shows 2.6% growth. The Volcker Rule is imposed, restricting banks from engaging in speculative investments that could harm consumers. The Affordable Care Act – Obamacare – is signed into law. It is the biggest health care reform in the last 50 years. 

Obama redirects budget funding into space exploration and education, and he signs a treaty with Russia in which both countries agree to reduce the number of nuclear arms. The Dodd-Frank Wall Street Reform Act and the Consumer Protection Act are signed into law. They protect consumers by giving more regulatory power to the government. The military’s “don’t ask, don’t tTell” policy is repealed. There is a two-year pay freeze for federal employees. 

In 2011, the US GDP by year graph shows a 1.6% increase. The Budget Control Act is signed into law. The federal debt ceiling is raised. 

In 2012, GDP rises by 2.2% and the Taxpayer Relief Act is signed into law. Low-income Americans get extended tax breaks while tax rates rise for top earners. 

2013–2014: In 2013, the GDP rises by 1.8%. After his re-election, Obama proposes immigration reforms, promotes a new act that is meant to prevent violence against women, and makes a plan to deal with the impending climate disaster. The bipartisan Student Loan Certainty Act is signed into law. It’s meant to help students deal with crippling college debt.

Obama also manages to make an agreement with the Republican Party to prevent a fiscal cliff disaster. Five tax increases and two spending cuts were due to take effect at the beginning of the year, and they would have contracted the economy by 1.3% and pushed the country back into the Great Recession. Fortunately, the House of Representatives approves a Senate bill that averts the crisis at the very last minute. 

The US GDP by year is rising in small increments as Obama attempts to raise the minimum wage, make community college free, and introduce the Clear Power Plan, which is intended to reduce carbon dioxide emissions from power plants. His proposals are shut down by Congress. 

The government enters sequestration both in 2013 and 2014 because the Democrats and the Republicans can’t agree on how to reduce deficit spending. Democrats want to keep taxing the rich and reduce military and defense spending, while the Republicans want to cut the budget for Obamacare and Social Security.

2015: The real US GDP growth by year in 2015 was up by 2.9%. This period of Obama’s presidency is marked by the free-trade agreement called the Trans-Pacific Partnership, which was made by the US and eleven other countries that border the Pacific Ocean. The negotiations for this agreement are successfully concluded, and all that’s left is for each country’s legislature to review and sign the agreement individually. Before this happens, President Trump will pull away from the agreement in 2017. 

In the face of Iran’s efforts to develop a nuclear bomb, Obama signs the Joint Comprehensive Plan of Action together with the UK, France, China, Russia and Germany. Iran agrees to limit nuclear weapons research. 

2016–present: The 2016 presidential elections mark an unprecedented moment in American history. Donald Trump’s unexpected victory jolts the country awake and manages to further divide Republicans and Democrats. The US GDP growth by year remains steady despite the new president’s chaotic leadership. 

One of Trump’s first acts as president is to sign an executive order that eases the burden of Obamacare regulations. On January 21, millions come out to protest at women’s marches all over the country.

On January 25, Trump signs an executive order to build a wall along the Mexican-US border. In the future, Congress will shut down each and every one of his attempts to fund this project. Between the wall, his attempts to repeal the DACA program, and several travel bans meant to prevent immigrants from entering the country, Trump continues to push anti-immigration policies at every step. 

In December 2017, he signs the Tax Cuts and Jobs Act, which cuts corporate taxes from 35% to 21%. 

Trump’s promise that the yearly GDP growth will rise above 4% in 2018 doesn’t come true. The GDP grows by 2.9% in 2018.  


Bonus: GDP by Presidents

As if that weren’t enough, here’s just a little bit more GDP goodness. Here’s a table that shows the state of the US GDP under different presidents and how each of them affected GDP growth. 

Before we proceed, we need to give you a disclaimer — the average growth in gross domestic product can provide an interesting overview of the economy during a specific era, but it’s a flawed way to measure the success of a president. Presidents inherit the state of the economy from their predecessors, and events beyond their control can impact US GDP by year. With that in mind, here’s the table:

President Beginning GDP (billions) Ending GDP (billions) Average Growth Rate
Warren Harding (R) 1920-1923 $0.67 $0.80 6.2%
Calvin Coolidge (R) 1923-1929 $0.80  $0.98 4.8%
Herbert Hoover (R) 1929-1933 $0.98 $0.82 - 4.5%
Franklin Roosevelt (D) 1933-1945 $0.82 $2.33 8.0%
Harry Truman (D) 1945-1953 $2.33 $2.70 1.7%
Dwight Eisenhower (R) 1953-1961 $2.70 $3.34 3.0%
John Kennedy (D) 1961-1963 $3.34 $3.70 4.4%
Lyndon Johnson (D) 1963–1969 $3.70 $4.94 4.9%
Richard Nixon (R) 1969-1974 $4.94 $5.66 2.8%
Gerald Ford (R) 1974-1977 $5.66 $6.22 2.3%
Jimmy Carter (D) 1977-1981 $6.22 $6.93 3.1%
Ronald Reagan (R) 1981-1989 $6.93 $9.19 3.5%
George H. W. Bush (R) 1989-1993 $9.19 $9.95 2.4%
Bill Clinton (D) 1993-2001 $9.95 $13.26 3.6%
George W. Bush (R) 2001-2009 $13.26 $15.21 1.7%
Barack Obama (D) 2009-2017 $15.21 $18.05 1.7%
Donald Trump (R) 2017-2018 $18.05 $18.57 2.6%


About author

Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.

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