The first year or two of the Reagan presidency was clearly recessionary, in fact it was deliberately induced by chockingly tight monetary policy.
Reagan and the then-ascendent supply-siders cut marginal tax rates in two steps (1981 & 1983), and the punishingly high capital gains tax rates. The economy roared ahead, tax revenues went way up in response and “paid for” the tax cuts. Supply-siders have ever since pointed to those years as vindication.
Also helping was the public’s becoming convinced that we were not in for runaway inflation. All those inflation hedges fell, cost-push inflation receded, and real investment in productive activities grew. The dragon of inflationary psychology had to be slayed.
