The U.S. economic situation in 1992 was favorable. The business cycle continued on an expansionary pattern following the trough of 1991 I. The economy was very consistent with real GDP growth with rates of: 3.8, 3.8, 3.1, and 5.4 in each quarter. Compared to 1991 this proved healthy for the U.S. economy. The unemployment rate for 1992 went up to an average of 7.5%, up from years 1990 and 1991 were rates were 5.8 % and 6.8%. 1992's increased unemployment rate was the principal factor of Bill Clinton's argument that the economy was in trouble and needed new direction. However, the rising unemployment rate might not have been entirely bad for the economy. In some situations it is possible to have good economic periods and unemployment rates rising when discouraged workers start looking for employment and are counted in the labor force. Inflation on the other hand was dropping beginning in 1990 with a 3.1 CPI inflation rate followed by: 3.1 in 1991, 2.9 in 1992, 2.8 in 1993, and finally 2.7 in 1994.
Fiscal policies were implemented during this year, but did not seem to have a dramatic effect on the economy as much of the implementation was based on the integration of individual and corporate tax system policies. The Federal Reserve was pursing an expansionary monetary policy during this year with federal funds rates being cut three times from 3 3/4 in April to 3 1/4 in July. Along with the federal funds rate dropping the Federal Reserve discount rate went from 3.5% in April to 3% in July where it remained until December.