Real GDP grew 4.2% this year. This above average growth rate continued to 1999. This marked the eighth consecutive year of positive GDP growth.
Consumption expenditures in 1998 were up 4.9%. In 1999 it grew at 5.3% accounting for 80% of real GDP growth. Disposable personal income grew 4% during 1998. Household spending increased because of the strong economic performance in 1998 and 1999.
The slow moving inflation of 1998 eventually picked-up in 1999. In 1998 the inflation rate of the consumer price index was 1.6% which increased to 2.2% in 1999. The .6% increase was primarily caused by the rises in energy prices.
The adjustment of inflation caused real wages to increase by almost 2.7% in 1998. This was the fastest real wage growth for more than two decades.
The April 1998 employment report verified strength in the economy because the unemployment rate had fallen from 4.7% to 4.3%. This rate dropped because of an increase of 1.4 million new jobs in 1999, which was an increase of almost 4%.
The Federal Government ran a surplus for fiscal year 1999 of $124 billion, compared with $69 billion in 1998. This marked the first time in over 40 years that the Federal Government has recorded two consecutive budget surpluses.
Despite the potential buildup of inflationary imbalances, the Federal Reserve raised the target Federal funds rate by 75 basis points in three steps over 1999, fully reversing the rate cuts it had in 1998 during the global financial crisis.