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. • 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
Affluence

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

6. • 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
Influence of WW2

7. • 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
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 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
Public Investment

10. • 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
Education

11. • 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
Infrastructure

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
•

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