Besides what BobS said, another possible reason is that the economy wasn’t really doing as well as we had thought. Here’s a chart from http://www.shadowstats.com which shows the U.S. GDP, using the historical calculation of CPI (as opposed to the tweeked versions used since the 1980’s).
By tweeking the definition of CPI, you can effectively manipulate the reported GDP. The chart illustrates the effects of all those tweeks.
So its possible that the economy was doing much worse than what was officially reported. Notice that GDP could have gone negative around 1995/1996.
What’s also interesting to me is that the ShadowStats GDP says that the 2001 recession actually lasts until 2003. I think its interesting because that’s exactly what it felt like to me. This experience gives me reason to believe that the ShadowStats GDP numbers are true.
