The New Global Economy Mr. White’s US History 2

Main Idea and Objectives Main Idea: Because of technological advances and new trade laws, the U.S. economy underwent a boom during the late 20th century. After this section, we should be able to: Describe changes in the American workplace. Explain increased competition for domestic and international markets

The 1990’s Boom Throughout the 1990s, the United States had experienced an economic boom Many jobs created and unemployment was the lowest since the 1970s Americans were generally optimistic about the economy However, some things were dangerous: The income gap (difference between what the rich and poor were making) began to grow: shrinking middle class Median household income (the middle amount between the highest and lowest halves) was also dropping People disagreed on the roots of the problems, but many people agreed that the economy was undergoing big changes

Decline of Manufacturing One of the most visible changes in the economy was the decline of the manufacturing sector and the growth of the service sector By 2000, nearly 80 percent of American workers were working in service jobs – teachers, medical professionals, lawyers, engineers, etc. Low-paying jobs grew fastest, but often corporations would hire temporary workers for these positions As a result of many corporations down-sizing to cut their payrolls, younger workers suffered the highest unemployment rates

Manufacturing Decline As the economy shifted, manufacturing experienced a sharp decline in the 1980s and 1990s Union membership declined High-tech workers felt no need for unions Low-wage workers feared being fired for unionizing Workers also saw their incomes declining Many manufacturing jobs were lost to computer-driven robots and other automation, but this also spurred the high-tech sectors of the economy The people in the best position were those with advanced training and specialized technical skills, or those willing to take risks in the economy

NASDAQ and Tech The NASDAQ was a technology-driven stock index that rose dramatically during this time, and many people had an increased enthusiasm for high-tech business These businesses were known as dotcoms, from the internet addresses that they used These businesses expanded rapidly Many people predicted that, as technology made communication easier, the price of doing business would fall dramatically – this was termed “The New Economy.”

Dotcoms The dotcoms did not succeed for long, and many were not making money Often, people did not advertise well enough for these companies Sometimes, the websites were too difficult for people to use, and so people didn’t buy from them As these businesses failed, many people stopped putting their money into electronic businesses

Corporate Scandals Corporate scandals threatened the economy, as well Enron – charged with using illegal accounting practices WorldCom – filed the largest bankruptcy claim in U.S. history Investors began to lose faith in corporations The continued threat of terrorism also had a negative impact on the economy

International Economy As all this happened, the international economy changed, as well Restrictions on international trade were removed, but many Americans worried that their jobs would go overseas to competing producers U.S. business did move many of their operations overseas to take advantage of decreased costs Businesses that did stay often decreased the wages of their workers The global economy began to slow, as investment between nations slowed down

Main Idea and Objectives Main Idea: Because of technological advances and new trade laws, the U.S. economy underwent a boom during the late 20th century. After this section, we should be able to: Describe changes in the American workplace. Explain increased competition for domestic and international markets