1. USA & the Wider World 1945-1989 Leaving Cert History
US ecomony

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 –
$7 billion
$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 – 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
$355 billion
$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% ( )

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
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 % %
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