According to Thompson (1992), this peak was not reached
due to high interest rates or a slowdown of the economy. The pent-up demand from the 1981-82
recession disguised the slowing growth in the population, down from approximately three million
in 1980 to only 1.5 million per year in 1991 (Liscio, 1991). Demand was satisfied due to this
slowing growth rate.
While the 1986 Tax Reform Act spurred consumer spending, it hurt business. This Act
repealed the investment tax credit, cut the value of depreciation allowances, and began the treatment
of capital gains as ordinary income. The resulting increase in business taxes curtailed investment