US Economy 1948-1968 Flashcards
US Economy 1948-1968
The Boom
Impact of WWII (boom)
Government Investment
Multinational Corporations
Population growth - Consumer Society
Technological/ Cheap energy
Decline
Johnson’s Great Society
Unemployment
Competition
Boom- Impact of WWII
Between 1945-1960, US economy doubled in size
Throughout this time unemployment and inflation remained low.
Inflation averaged at 2.5% a year from 1951-1970
And the us enjoyed “The greatest prosperity the world has ever known”
US population in 40s was only 7% of the worlds population
yet it possessed over 40% of the world income at this time a
nd produced half of the worlds manufacturing output.
No war damage in the US from WWII, which meant no reconstruction
US benefitted by exports to damaged countries/areas
During the boom in the 60s many Americans became homeowners, high consumers and were well educated.
By 1960, families could buy about 30% more than they could in the 50s
Boom- Government investment
US Government spending increased form 10 billion in 1940 to 580 billion in 1980.
Employment act stated that federal government should try to achieve maximum employment, production and purchasing power.
GI Bill Of Rights, 1944 passed, gave aid to veterans to buy houses, start businesses and educate themselves.
By 1956, 8 million veterans benefitted form further education
This helped the economy grow through the provision of increased skills and a boost to the construction industry.
Federal-Aid Highways Act 1856, gave federal grants to build a network of motorways across the US
Over 15 years the government spent 43 billion on roads
Government spent a great deal on the Social Welfare Programme in the 30s, added to in the 50s and especially during President Johnson’s Great Society Programme in the 60s
Boom- Multinational Corporations
After WWII, one of the features of the changing American Economy was the concentration of economic power in business and industry.
The growth of the world market, and the growth of the European economy during the 50’s and 60’s provided a prosperous market for American Multinationals
Mergers and acquisitions spread outside the US as American corporations took over foreign companies.
Some US companies also set up overseas due to lower corporation tax and to take advantage of low wages in certain countries.
This created giant multinationals like IBM or Exxon which had factories and offices in many countries
3/4 of manufacturing industry was controlled by 100 companies
These developments led to globalisation ie the closer integration of the worlds economies.
Boom- Population growth and consumer society
After WWII there was a Post war baby boom from 45-60
Babies born at this time were known as Baby Boomers, they were better fed, educated and demanded more of their society than their parents
Alongside this, there was also a decline in death rates during this period due to better food, medicine such as penicillin, and vaccines.
This led to an increase of young people in the country which contributed to the consumer boom during the 50s and 60s as the teen market took off.
The rapidly growing economy created greater mobility in the population. There was movement from cities to suburbs and countryside to cities.
By 1980 over 75% of the population lived in cities
Boom- Technological advancements and cheap energy
The American Economy benefitted from cheap energy such as oil and technological advances.
There were significant advances in research and development which increased productivity and real per capita income.
The output per worker rose about 35% in each decade.
The number of scientists and engineers involved in industrial research grew six times between 1945 and 1961
Many inventions were made, for example transistors in 1940 which were used in machines from computers to hearing aids
Decline- Impact of Vietnam and Johnson’s great society
Johnson said “I believe we can continue the great society while we fight i. Vietnam”
But the Vietnam war inevitably began to impact Johnson’s great society.
There were budget deficits as taxes weren’t raised as spending increased on the war (military spending, weaponry, aircraft etc)
The US had to borrow money which caused inflation in the country
There was a balance of payments- US began to import more than they exported
Labour costs rose and wages rose
Decline- Unemployment
Due to the recession in the 60s, unemployment rose between 1969-1971 as labour costs rose
Inflation and unemployment was called stagflation
7 million were unemployed during this
period
Veterans sought jobs as defence industries cut back, this hit minorities the hardest
Decline- Competition
One of the factors which worsened the US economy into the 70s was international competition from Western Europe and Japan
Between 1966 and 1987 other economies grew faster than the US (3.3%) for example West germany (13%)
These countries invested more of their income in business
This led to more imports coming into the US, the decline of some manufacturing industry and the worsening of balance of payments
Some claimed the US was going through a process of deindustrialisation as shown by the decline of some of their basic industries eg steel
US was no longer the largest trading bloc
US share of world trade declined from 25% in 1948 to 10% by 1970
Conclusion
In conclusion the failure of governmental and presidential policies to solve their economic problems through the 60s and 70s resulted in the rapid decline in the US Economy.
The decline in the US economy could’ve been hindered by a better government reaction to it.
Nixon only took measures to improve the economy in 1970 on rising interest rates , this drove the economy into a further recession he then put a freeze to wages for three months, and abandoned the fixed exchange rate system
Us dollar was devalued which made exports cheaper and imports dearer
