[208] According to Paul Krugman, "Over all, the 1982 tax increase undid about a third of the 1981 cut; as a share of GDP, the increase was substantially larger than Mr. Clinton's 1993 tax increase."[209]

Inflation and unemployment
Monthly unemployment, inflation, and interest rates from January 1981 to January 1989, according to the Bureau of Labor Statistics and Federal Reserve Economic Data
Reagan took office in the midst of stagflation.[195] The economy briefly experienced growth before plunging into a recession in July 1981.[210] His approval ratings also began to drop significantly throughout the rest of the year and 1982.[182] Federal Reserve chairman Paul Volcker fought inflation by pursuing a tight money policy of high interest rates,[211] which restricted lending and investment, raised unemployment, and temporarily reduced economic growth.[212] In December 1982, the Bureau of Labor Statistics (BLS) measured the unemployment rate at 10.8 percent.[213] Around the same time, economic activity began to rise until its end in 1990, setting the record for the longest peacetime expansion.[214] In 1983, the recession ended[215] and Reagan nominated Volcker to a second term in fear of damaging confidence in the economic recovery.