USA & the Wider World 1945-1989

1. USA & the Wider 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. Affluence • By mid-1960s the USA was a very wealthy society • Many citizens owned their own homes • High consumers of goods – cars, household appliances etc • Were well educated

5. Reasons for the Boom • Influence of WW2 • Public Investment • Other Factors

6. Influence of WW2 • During WW2 American 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

7. After the War • These savings were 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

8. American Companies • 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

9. Public Investment • Government spent mainly 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

10. Education • Council of Economic 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

11. Infrastructure • 1956 Highway Act • 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

12. Great Lakes Seaway

13. The Gross Domestic Product • 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 had large deposits of Oil Cheap energy Made advances in Science and Technology Increased productivity – worker output increased by 35% (1940-1970)

15. Other Factors • The Baby Boom – • 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 • Created a 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 • US Economy 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 the Crisis 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 • US government unable to solve the crisis

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 • Increased interest 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 economy in 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 the economy 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 millionaires each 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 replaced by 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 prepared by: • Dominic Haugh • St. Particks Comprehensive School • Shannon • Co. Clare • Presentation can be used for educational purposes only – all rights remain with author