1.4 Second World War post-war affluence and growth.
FACTORS LEADING TO POST WAR BOOM
Pent-up demand for consumer goods that people had gone without in the war. Production increased from 213 Billion dollars in 1945 worth of goods to 284 Billion worth of goods in 1950
Government came down hard on strikes for higher wages. When Coal Miners went on strikes Truman took control of the mines and when rail workers protested about this Truman also took over the railways.
When strikers held up 25,000 goods trucks he drafted in the army.
"Baby Boom" caused a growing demand for child centred goods like toys, nappies and milk.
In 1959 toy firms made 1.6 billion and 2 billion in 1961
Farmers received subsidies and demand for food increased as people spent more money on food.
Government spending rose steadily after the War under Truman's fair deal policies as it gave support to all those leaving military service. It offered them leaving payment, access to loans and Medical help.
The Government also introduced the GI bill which provided education and training. (over 12 million did this)
1949 National Housing Act 810,000 low-income housing units to replace slums.
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INFLATION AND GROWING AFFLUENCE
1950s
1960s
-Economy was good as people had confidence about 'the American way' as consumerism was partriotic.
However, it was not all steady economic growth as inflation and unemployment increased sharply for a year or so.
However, reasons for growth of suburbs is that people saw inner-cities as slum ridden.
Change and shifts at the end of 1950s Sunbelt
America lost it holds in many of the world markets to countries like Japan who were able to constantly innvovate goods. Eg America invented first transistor radio but failed to innovate it and Japan did.
By 1958 there were 45 million transistor radios in USA.
Due to war military production moved from North and East to South and West as land was cheaper.
After war they moved to producing peacetime goods.
in 1950s the Government wanted to keep interest rates low so increased the money supply. In 1952 there was 169.7 billion and by 1960 it was 215.8 billion in circulation.
-The US Government lost its position as the world's most important exporter.
-its finances were being being drained by the Vietnam War.
-The balance between paper currency and gold was increasingly out of balance. The 1944 Bretton woods agreement had made the dollar the currency to be backed by the gold reserve.
-The government saw a problem with the gold reserve. In 1966 it slowed increasing of the money supply, there was an immediate downturn in the economy and inflation kept rising.
1970s STAGFLATION
The general price level in the US was increasing despite there being low economic growth and high unemployment.
H/E some workers had wages linked to CPI
This stagnation was caused by the increased costs for businesses:
-businesses had to pay higher taxes
-the cost of raw materials/commodoties was higher
-productivity levels were low so US companies were less efficient.
Decreased exports for US 1953 share of exported goods was 29% and 13% in 1973.
GOVERNMENT ACTION
-Federal spending was high to the returning soldiers from Vietnam + due to linking welfare payments to CPI in 1972-1974
-The Government was nervous of public reaction when they tried to control the money supply.
-The Government linked inflation to Welfare payments but this increased debt
-1979 the Money Supply was contained by fed
OIL CRISES MAX SPEED 55mph
Arab-Israeli War (1973)
The OPEC who was in charge of the trading of Oil supported Palestine so sanctioned countries that supported Israel. This meant they increased Oil prices by 70% and embargoed Oil exports to the USA.
In 1979 there was another fuel shortage from May July this was a concern for the winter and heating.
CONFIDENCE CRISIS
-Soaring fuel prices caused there to be dip in confidence in the economy as businesses stopped investing. This caused unemployment to rise from 5.8% to 7.1% in 1979.
-In July 1979 Carter addressed the nation, suggesting that the biggest crisis was a confidence crisis. However, people did not have confidence in his austerity measures so Reagan was voted in.
Suburbs
Factories, colleges and universities moved to suburbs.
-1956 interstate high way act built 41,000 miles of highway.
Due to this expansion companies like Levitt company built prefabricated levittbowns.
One example was Long Island that had 17k households and 82k inhabitants
and cheapest house was under 7k.
However, construction companies refused to sell to black americans.
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One problem with the post war boom was that there was inflations so prices were rising at a faster rate than wages.
Truman passed the 1946 Employment Act with a goal to reach full employment, which set up a group of economic advisors to help the president.
The OPA that had been controlling prices in the war had been closed down which caused prices to increase by 25%.
The Government also tightened the money supply and kept taxes low in order to keep inflation low.
One problem with the post war boom was that there was inflations so prices were rising at a faster rate than wages.
Truman passed the 1946 Employment Act with a goal to reach full employment, which set up a group of economic advisors to help the president.
The OPA that had been controlling prices in the war had been closed down which caused prices to increase by 25%.
The Government also tightened the money supply and kept taxes low in order to keep inflation low.
IMPACT OF FUEL CRISIS
-Bad for car dependent Americans
-Created discontent as the government was seen as making matters worse by stockpiling
-Changed car buying habits as Americans went from gas-guzzling vehicles to more efficient Japanese ones.