Stagflation and economic crisis in 1970s America

¶ … National Crisis of the U.S. in the 70s

What important political events and economic factors contributed to the sense of national crisis that permeated the U.S. for much of the 1970s? Why, given America's history since the end of the World War II, was this perceived crisis such a shock to so many Americans?

The economy of the United States of America was suffering serious drawbacks after the Vietnam War. For the first time, the U.S. faced unfamiliar prospects of a shrinking economy, and the citizens were becoming increasingly disenfranchised. Some of the common problems on the streets included lack of fuel, soaring inflation and record unemployment, among a myriad of other issues (Elco U.S. History, n.d.). The lack of fuel was aggravated by international trends in the oil industry. There was a global shortage too. This scenario led to inflated gas prices. These issues affected a number of nations in Europe too. The scenario is what gave birth to stagflation. This is a term that was commonly used to refer to a coincidence of inlfation and recession. In perspective, the crisis triggered oil prices in the U.S. to take a skyward trajectory; with a sudden increase from 35 cents per gallon at the beginning of the 70s to over 90 cents in less than 10 years. The oil embargo was lifted in 1974, but the country kept reeling with the effects for the better part of the century (Elco U.S. History, n.d.). There were many reasons why the economic problems lasted longer that they should have. Some highlights of the changing trends that sunk the economy further include: the ever rising property prices, lack of employment, inflated car prices and more. A lot of investors shied away from the bank system because they had no confidence in it. There were no structures to arrest the degenerating state of affairs. It was, even, more disturbing to note that no one was even willing to take up the leadership of the federal government. So, in essence, there was no one in charge of anything to rescue the country from the economic crisis. There are three primary reasons that led to the persistence of the problem (Elco U.S. History, n.d.)

1 The state government did not have anyone to preside over efforts to forestall the declining economy until the 80s when Paul Volcker stepped in as the chairperson of the Federal Reserve and set up stringent measures that began to aid the economy.

2 The economic policies of the sixties were simply bad and incompatible with the situation in the 70s. The policy makers were up against bad luck too.

3 It was hard to believe that the recess was fluctuating as opposed to the premise by some that it was a shortfall measuring below potential productivity and potential unemployment (Elco U.S. History, n.d.)

The United States experienced unemployment rise from 4% in 1970 to 6% in the same year. There was a glimmer of hope in 1973 when the unemployment figures showed signs of improvement, but soon went back to the negative spiral and hit 9% in 1975. The figures recorded for 1975 were the worst ever since the great depression of 1930s. The country suffered these worrisome unemployment rates for two more decades. The worst came between 1982 and 1983 (Thornton, 2004)

It can be argued that the events were an extrapolation of the trends of the 60s. This was a period of a lot of social unrest. There were many groups up in arms and protest against discrimination. Civil rights movements formed around African-American plight for equality, the lesbian activists were on the blaze, and women's organizations agitated for equal treatment too. Many Americans also joined the protest against the war in Vietnam. One notable factor that rocked the boat and seemed to undermine the confidence of citizens in the federal government was the leadership of President Richard Nixon. Indeed these events seem to have shaped the core of American life today (History.com Staff, 2010).

There was a silent, but significant majority that provided a comfortable launching pad for President Nixon. These silent groups helped him into office in 1968. While it was obvious that the majority was opposed to the war, President Nixon did not have intentions of ending it. Instead, he devised ways of making it more acceptable by disengaging the American troops and encouraging the war burden to shift to the Vietnamese soldiers.