Federal tax policy also fueled this period. The 1981 Economic Recovery Tax Act cut federal
taxes by 25 percent over three years. Personal income taxes were again cut by the Tax Reform Act
of 1986 that mandated just two tax brackets, 15 and 25 percent.
A significant aspect of the 1990-1991 recession dealt with the housing sector. The housing
boom reached its peak in the late 1980s. 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.