Reagan's management of the economy was really pretty deft. He inherited the biggest recession the U.S. has seen between the Great and Today's. They called it the Reagan recession, but to be fair he had almost nothing to do with it (recession doesn't rhyme with Volcker...). Reagan increased government spending, cut taxes, and reduced bank regulation. It was shockingly Keynesian, but was probably just the ticket to jump starting an economy that had suffered through stagflation and an incredibly tight episode of monetary policy. Government spending got consumers moving and eventually business investment. It's funny how today's republicans revere Reagan, the Keynesian who supported gun control legislation. Reagan was a conservative for his time, but probably wouldn't pass the chalk today. Same with FDR the beacon of Keynesian liberalism. Government spending was flat, until the war broke out, but every thinks he as this amazing big spending progressive (he was progressive, but only spent more as a percentage of revenue, not more in absolute dollar terms until the U.S. geared up for war).