The Great Regression refers to worsening economic conditions affecting lower earning sections of the population in the United States, Western Europe and other advanced economies starting around 1981. These deteriorating conditions include rising inequality; and falling or stagnating wages, pensions, unemployment insurance, and welfare benefits. The decline in these conditions has been by no means uniform. Specific trends vary depending on the metric being tracked, the country, and which specific demographic is being examined. For most advanced economies, the worsening economic conditions affecting the less well off accelerated sharply after the late-2000s recession. [1] [2]
The Great Regression contrasts with the "Great Prosperity" or Golden Age of Capitalism, where from the late 1940s to mid 1970s, economic growth delivered benefits which were broadly shared across the earnings spectrums, with inequality falling as the poorest sections of society increased their incomes at a faster rate than the richest. [1] [2]
Some of the trends making up the great regression pre-date 1981. Such as stagnating wages for production and non-supervisory workers in the U.S. private sector; real wages for these workers peaked in 1973. Or the divergence in increases of productivity and pay for such workers: these two factors tended to increase in "lock-step" until about 1973, but then diverged sharply, with productivity increasing massively over the following decades, while pay stagnated. The breakdown of Bowley's law, the apparently near fixed proportion of economic output going to workers, is another enduring change which began around the mid 1970s. [3]
Robert Reich considers the main cause to be political, with the rich better able to influence politics. [1] The great regression has largely coincided with decreasing bargaining power for workers, which itself partly results from the falling influence of unions. Especially since 2013, the adverse economic trends have been increasingly blamed on technological unemployment, and with recently increased uptake of robots and automation in the emerging economies, there are concerns that workers there too may soon suffer from the great regression. [3] Since 1980 in the United States, under Reaganomics, there has been a decline of the progressive income tax (with major federal tax cut legislation being enacted in 1981, 2001, and 2017) leading to a rise in inequality. [4]
In economics, a recession is a business cycle contraction that occurs when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending. This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale anthropogenic or natural disaster.
Unemployment, according to the OECD, is people above a specified age not being in paid employment or self-employment but currently available for work during the reference period.
The United States is a highly developed/advanced mixed economy. It is the world's largest economy by nominal GDP; it is also the second largest by purchasing power parity (PPP), behind China. It has the world's sixth highest per capita GDP (nominal) and the eighth highest per capita GDP (PPP) as of 2024. The U.S. accounted for 26% of the global economy in 2023 in nominal terms, and about 15.5% in PPP terms. The U.S. dollar is the currency of record most used in international transactions and is the world's reserve currency, backed by a large U.S. treasuries market, its role as the reference standard for the petrodollar system, and its linked eurodollar. Several countries use it as their official currency and in others it is the de facto currency. Since the end of World War II, the economy has achieved relatively steady growth, low unemployment and inflation, and rapid advances in technology.
Business cycles are intervals of general expansion followed by recession in economic performance. The changes in economic activity that characterize business cycles have important implications for the welfare of the general population, government institutions, and private sector firms. There are numerous specific definitions of what constitutes a business cycle. The simplest and most naïve characterization comes from regarding recessions as 2 consecutive quarters of negative GDP growth. More satisfactory classifications are provided by, first including more economic indicators and second by looking for more informative data patterns than the ad hoc 2 quarter definition.
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In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes economic inequality which is a concern in almost all countries around the world.
Real wages are wages adjusted for inflation, or, equivalently, wages in terms of the amount of goods and services that can be bought. This term is used in contrast to nominal wages or unadjusted wages.
Economic stagnation is a prolonged period of slow economic growth, usually accompanied by high unemployment. Under some definitions, slow means significantly slower than potential growth as estimated by macroeconomists, even though the growth rate may be nominally higher than in other countries not experiencing economic stagnation.
The Prices and Incomes Accord was a series of agreements between the Australian Labor Party (ALP) and the Australian Council of Trade Unions (ACTU), in effect from 1983 to 1996. Central to these agreements was an incomes policy to address the stagflation crisis by restraining wages. The unions agreed to restrict their wage demands, and in exchange, the government provided a 'social wage' of welfare and tax cuts.
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The Great Depression (1929–1939) was a severe global economic downturn that affected many countries across the world. It became evident after a sharp decline in stock prices in the United States, leading to a period of economic depression. The economic contagion began around September 1929 and led to the Wall Street stock market crash of 24 October. This crisis marked the start of a prolonged period of economic hardship characterized by high unemployment rates and widespread business failures.
The Lost Decades is a lengthy period of economic stagnation in Japan precipitated by the asset price bubble's collapse beginning in 1990. The singular term Lost Decade originally referred to the 1990s, but the 2000s and the 2010s have been included by commentators as the phenomenon continued.
Redistribution of income and wealth is the transfer of income and wealth from some individuals to others through a social mechanism such as taxation, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law. The term typically refers to redistribution on an economy-wide basis rather than between selected individuals.
On July 2, 1990, the economies of the two German states became one. It was the first time in history that a capitalist and a socialist economy had suddenly become one, and there were no precise guidelines on how it could be done. Instead, there were a number of problems, of which the most severe were the comparatively poor productivity of the former East German economy and its links to the economies of the Soviet Union and Eastern Europe, which were rapidly contracting.
Unemployment in the United States discusses the causes and measures of U.S. unemployment and strategies for reducing it. Job creation and unemployment are affected by factors such as economic conditions, global competition, education, automation, and demographics. These factors can affect the number of workers, the duration of unemployment, and wage levels.
Economic democracy is a socioeconomic philosophy that proposes to shift ownership and decision-making power from corporate shareholders and corporate managers to a larger group of public stakeholders that includes workers, consumers, suppliers, communities and the broader public. No single definition or approach encompasses economic democracy, but most proponents claim that modern property relations externalize costs, subordinate the general well-being to private profit and deny the polity a democratic voice in economic policy decisions. In addition to these moral concerns, economic democracy makes practical claims, such as that it can compensate for capitalism's inherent effective demand gap.
In economics, secular stagnation is a condition when there is negligible or no economic growth in a market-based economy. In this context, the term secular means long-term, and is used in contrast to cyclical or short-term. It suggests a change of fundamental dynamics which would play out only in its own time. The concept was originally put forth by Alvin Hansen in 1938. According to The Economist, it was used to "describe what he feared was the fate of the American economy following the Great Depression of the early 1930s: a check to economic progress as investment opportunities were stunted by the closing of the frontier and the collapse of immigration". Warnings of impending secular stagnation have been issued after all deep recessions since the Great Depression, but the hypothesis has remained controversial.
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Poverty in Norway had been declining from World War II until the Global Financial Crisis. It is now increasing slowly, and is significantly higher among immigrants from the Middle East and Africa. Before an analysis of poverty can be undertaken, the definition of poverty must first be established, because it is a subjective term. The measurement of poverty in Norway deviates from the measurement used by the OECD. Norway traditionally has been a global model and leader in maintaining low levels on poverty and providing a basic standard of living for even its poorest citizens. Norway combines a free market economy with the welfare model to ensure both high levels of income and wealth creation and equal distribution of this wealth. It has achieved unprecedented levels of economic development, equality and prosperity.
During periods when the very rich took home a larger proportion—as between 1918 and 1933, and in the Great Regression from 1981 to the present day—growth slowed, median wages stagnated and we suffered giant downturns. ...
Wages, pensions, unemployment insurance, welfare benefits and collective bargaining are under attack in many countries as governments struggle to reduce debts swollen partly by the cost of rescuing banks during the global financial crisis.
