Economic impact of WW2 and post-war developments

Economic impact of WW2 and post-war developments

The Economic Impact of WWII on the USA (1941-1945)

  • WWII ended the Great Depression and ignited a period of economic prosperity in the USA.
  • The USA became an “arsenal of democracy”, providing weapons and supplies to the Allied forces, thereby boosting manufacturing and employment.
  • Many Americans went to serve in the war, leading to labour shortages at home. This was filled by women and minority groups, leading to societal change.
  • Rationing and price controls were introduced due to the demands of the war economy.
  • During the war, national debt increased significantly due to the heavy borrowing necessary to finance the war effort, creating economic implications for the post-war era.

Post-War Era and The Baby Boom (1945-1964)

  • The end of the war saw a boom in consumer spending, as people who had been saving during the austerity of the war years now had money to spend.
  • The G.I. Bill of Rights (1944) provided returning veterans with benefits, including loans for houses and for starting businesses. This fostered economic development and fuelled the growth of ‘Suburbia’.
  • After the war years, the birth rate skyrocketed. This period of increased birth rate is referred to as the ‘Baby Boom’.
  • The rapid population growth led to increased demand for consumer goods, healthcare, and education, giving a significant boost to the economy.

The Golden Age of Capitalism (1945-1970)

  • The post-war period is often referred to as the ‘Golden Age of Capitalism’ as it saw unprecedented economic growth and prosperity in the USA.
  • Technological advancements in sectors such as automobile, aviation, telecommunications, and electronics fuelled economic growth and development.
  • During this time, the USA saw the expansion of middle-class, home ownership, a booming stock market, and the establishment of Social Security.
  • The Marshall Plan and founding of international institutions like the World Bank and IMF further established the USA’s economic dominance globally.

Economic Stabilisation Measures Post-War

  • The Employment Act of 1946 committed the federal government to ensuring economic growth and stabilising post-war inflation.
  • The Federal-Aid Highway Act of 1956 led to the development of a vast interstate highway system, stimulating economic growth and making the transportation of goods easier and more efficient.
  • Post-War USA saw the growth of the ‘Military-Industrial Complex’, with defense industries playing a significant role in the economy.