Problems With the American Economy, 1973-1980

Question 1

3 Recessions

Answer 1

1974-5
1980
1981-2

Question 2

Inflation

Problem

Answer 2

1973-83- average 8.2% inflation, 13.8% in 1980
1978 poll- 63% considered it their greatest concern

Question 3

Inflation

Impact

Answer 3

Borrowing expensive- interest rates around 20%
So drop in investment
Real income fell each year 1973-1981

Question 3

Unemployment

Problem

Answer 3

6.5% in Dec 1974, 8.9 % by May 1975
Steel production + car manufacturing badly hit

Question 4

Unemployment

Rust Belt

Answer 4

Areas of declining manufacturing output
Pennsylvania- maufacturing 46% of jobs 1951, fallen to 24% 1977- more than 20% of pop relied on welfare

Question 5

Unemployment

Alternative

Answer 5

Alternative employment in service industries- 60% of job opportunities in 1970
But low paid- fed min wage rose from $2.10 to $3.35 in 1981, but failed to match rising prices

Question 6

Poverty

Problem

Answer 6

11.2% to 12.5% (1974-1976) below poverty line
Food-stamp families- 18.5 million to 20 million (1976-1980)

Question 7

Poverty

Most Impacted

Answer 7

Black families hard hit- disproportionately represented in unskilled occupations
50% of black single mothers in poverty
Highest in states with limited welfare provision, e.g Mississippi

Question 8

Homelessness

Causes

Answer 8

Inflation + rising unemployment led to rising household debt + bank foreclosures
Inner-city ‘skid row’ hotels demolished, lack of alternative places to live

Question 9

Homelessness

Mental Illness

Answer 9

By mid 1970s, number of institutions for mentally ill decreased to reduce spending