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USA Economy 1945-1989
- 1. USA & theWider World 1945- 1989 • Leaving Cert History • US ecomony 1945-1990
- 2. It’s the Ecomony,Stupid •Bill Clinton’s Presidential campaign slogan in 1992
- 3. The Post-War Boom •After WW2 the USA was the greatest military and economic power on the planet – one of two superpowers. • By 1950 the US had – - 7% of the world population - Produced 50% of the world’s manufactured goods - Created 40% of the world’s income
- 4. • By mid-1960sthe USA was a very wealthy society • Many citizens owned their own homes • High consumers of goods – cars, household appliances etc • Were well educated Affluence
- 5. • Influence ofWW2 • Public Investment • Other Factors Reasons for the Boom
- 6. • During WW2American industries expanded to meet the demands of the war • This led to increased demand for Iron, Steel, Coal and Oil • This in turn created employment – brought millions of women into workforce • Family earnings increased • During war people had few goods to spend their income on • By 1945 Americans had $140billion in private savings Influence of WW2
- 7. • These savingswere spent on consumer goods • This led to incresed consumer production – more employment etc. • With more people working the government collected more tax – 1940 - $7 billion 1945 - $51 billion After the War
- 8. • During War– made large profits from government contracts • Led to the establishment of large corporations – through mergers • By 1945 – 75% of all manufacturing industry was controlled by 100 corporations • Because of their size and wealth these companies were able to stay ahead of their competitors American Companies
- 9. • Government spentmainly on defence and the military • Between 1945-1970 – 60% of all government spending went on military spending • Korean War • Vietnam War • Cold War • The ‘military industrial complex’ • Created boom in the economy – large profits and increased employment Public Investment
- 10. • Council ofEconomic Advisors - ‘the business of American Governments was business’ • The GI Bill of Rights helped war veterans to buy their own homes, start businesses, go to education • By 1956 over 8 million veterans had gone to further education • The construction industry benefitted from contracts to build the new schools and colleges Education
- 11. • 1956 HighwayAct • 41,000 miles of interstate highways were built • Total cost $30 billion – 90% provided by federal government • With Canada they built the Great Lakes - St. Lawrence seaway – canals connecting the great lakes to the Atlantic • Massive boost for the construction industry • Benefitted the transportation of goods Infrastructure
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- 13. The Gross DomesticProduct • 1950 - $355 billion • 1960 - $488 billion • Investment at a rate of $40 billion per year • GNP grew by – – 1964 – 7% – 1965 – 8% – 1966 – 9% • However – 40 million Americans still lived in relative poverty
- 14. Other Factors America hadlarge deposits of Oil Cheap energy Made advances in Science and Technology Increased productivity – worker output increased by 35% (1940- 1970)
- 15. Other Factors •The BabyBoom – •In 1946 nearly 4 million babies were born •The birth rate steadily increased until the end of the 1950s – by 1958 a third of the US population were under 15 years of age. •Growing Demand for goods and services – clothes, food, toys etc •A rampant consumer society fuelled the economic boom
- 17. Baby Boom • Createda demand for housing, schools, leisure facilities. • Middle class Americans moved to the ‘Burbs’ (suburbs) • By 1960 – 25% of Americans lived in the suburbs • This led to a demand for more cars (and new Highways) – – 1945 – 26 million cars – 1955 – 130 million cars
- 18. US Economy 1968-1989 •JFK – elected in 1960 – tax reform, social welfare reform civil rights – borrowed money • LBJ – announced ‘The Great Society’ – a war on poverty. • $800 million made available to improve health and education and tackle urban poverty • Vietnam War – Cost $120 billion ($700 billion in today’s money)
- 19. Deficit Spending • Keep‘The Great Society’ going and to fund the Vietnam War – LBJ borrowed money. • Federal deficit grew rapidly – national debt soared. • By the late 1960s the economy was slowing down. • Inflation and unemployment increasing
- 20. 1973 Crisis • USEconomy was running into trouble • Trigger for worldwide economic recession • War between Israel and Egypt 1973 – the Yom Kippur War • USA agreed a $2.2 billion arms deal to Israel • OPEC responded by cutting oil supplies and increasing the price of oil • USA imported 30% of OPEC’s oil
- 21. Effects of theCrisis in USA •Rising inflation •Rising unemployment •Drop in real income for workers •Workers didn’t have the education or skills for the new hi-tech economy – unemployable • High inflation + low growth + high unemployment = stagflation •
- 22. Ford replaces Nixon •In 1974 Gerald Ford faced a rising trade deficit • Caused the value of the dollar to drop • ‘Whip Inflation Now’ – cuts in spending and increased taxes – no solution • In 1975 – gave income tax rebates and cut business taxes
- 23. Jimmy Carter •President 1977 •Increasedinterest rates to discourage borrowing and reduce inflation •Increased oil costs from a second oil crisis in 1979 pushed inflation to 13%
- 24. Reaganomics •1981 US economyin deep recession •Unemployment 10% •33% of US manufacturing not working •Interest rates = 20% •Reagan introduced massive cuts in public spending and cut personal and business taxes
- 25. Tax Cuts •As theeconomy recovered Reagan introduced massive tax cuts for the wealthy •Massive increase in military spending ($1.2 trillion) •Government borrowing soared –1980 $930 billion –1989 $2.6 trillion •More debt that all previous US presidents
- 26. Millionaires •100,000 new millionaireseach year •Poor Americans saw their income drop •Massive gap between rich and poor •Many new jobs were low paid service industries
- 27. Ongoing Crisis •USA replacedby EEC as world largest trading block •US share of world trade –1948 25% –1985 15.4% •Caused by – –growing competition from abroad (Europe and Japan) –A decline in domestic production –Rising unemployment
- 28. • Presentation preparedby: • Dominic Haugh • St. Particks Comprehensive School • Shannon • Co. Clare • Presentation can be used for educational purposes only – all rights remain with author