The 1990s Business and the Economy: Overview

The remarkable performance of the U.S. economy in the 1990s called into question many long-standing economic assumptions, practices, and values. Suddenly, and in many instances quite unexpectedly, the old rules governing business seemed to have become obsolete. No one knew for sure what the new rules were going to be. A unpredictable decade for business, it was as full of opportunity as of peril.

This upheaval resulted primarily from the arrival of the Internet, which transformed life for most Americans. Suddenly, the whole world was more accessible, as an unprecedented quantity and variety of information enabled companies and individuals to function more efficiently and profitably. The Internet fundamentally changed business as brash, computer-savvy entrepreneurs overshadowed many of their counterparts who found themselves struggling to make sense of the new cyberworld.

Internet technology may also have permanently enhanced the economy and accelerated its rate of growth, while keeping at bay the inflation of prices and wages that in the past had undermined prosperity. Companies merged to form bigger, richer, and more powerful entities. Experts speculated about how long the boom could last and what, if anything, might finally bring it to an end. No one, though, could deny that a new economy began to take shape, one that differed substantially from what economists had expected. The most startling aspect of this new economy was that it challenged the view that inflation would inevitably result from a growth rate higher than 2.5 percent coupled with an unemployment rate below 5 percent. In the 1990s, both of these conditions were met, yet the economy continued to prosper.

The "new economy" affected different sectors of the workforce in various ways. The top few workers received high salaries, in part because often there were not enough individuals with the specialized skills needed to fill these positions. Women and minorities made gains in the workplace but, on the whole, they were still denied access to the top business positions. In response, many women in the decade left the corporate world and started their own small businesses.

Multinational corporations increasingly dominated the world economy during the 1990s, pushing forward economic globalization. Eight corporations, seven of them American, were among the top twenty-five economic entities in the world. As the decade drew to a close, Americans living in a digital economy prepared to enter an economic future of electronic money and mammoth financial and business conglomerates.