Transitioning to Peacetime Economy
Massive wartime spending doubled economic growth rates, either masking the effects of the Depression or essentially ending the Depression. Businessmen ignored the mounting national debt and heavy new taxes, redoubling their efforts for greater output to take advantage of generous government contracts.
Wartime rationing was officially lifted in September 1945, but prosperity did not immediately return as the next three years would witness the difficult transition back to a peacetime economy. 12 million returning veterans were in need of work and in many cases could not find it. Inflation became a rather serious problem, averaging over 10% a year until 1950 and raw materials shortages dogged manufacturing industry. In addition, labor strikes rocked the nation, in some cases exacerbated by racial tensions due to African-Americans having taken jobs during the war and now being faced with irate returning veterans who demanded that they step aside. The huge number of women employed in the workforce in the war were also rapidly cleared out make room for their husbands.
Peacetime Prosperity
Following the Republican takeover of Congress in the 1946 elections, President Truman was compelled to reduce taxes and curb government interference in the economy. With this done, the stage was set for the economic boom that, with only a few minor hiccups, would last for the next 23 years. After the initial hurdles of the 1945-48 period were overcome, Americans found themselves flush with cash from wartime work due to there being little to buy for several years. The result was a mass consumer spending spree, with a huge and voracious demand for new homes, cars, and housewares. Increasing numbers enjoyed high wages, larger houses, better schools, more cars and home comforts like vacuum cleaners, washing machines—which were all made for labor-saving and to make housework easier. Inventions familiar in the early 21st century made their first appearance during this era.
A Consumer Society
Consumerism represented one of the consequences (as well as one of the key ingredients) of the postwar economic boom. The initial quest for cars, appliances, and new furniture after the end of World War II quickly expanded into the mass consumption of goods, services, and recreational materials during the Fifties. Between 1945 and 1960, GNP grew by 250%, expenditures on new construction multiplied nine times, and consumption on personal services increased three times. By 1960, per capita income was 35% higher than in 1945, and America had entered what the economist Walt Rostow referred to as the "high mass consumption" stage of economic development. Short-term credit went up from $8.4 billion in 1946 to $45.6 billion in 1958. As a result of the postwar economic boom, 60% of the American population had attained a "middle-class" standard of living by the mid-50s (defined as incomes of $3,000 to $10,000 in constant dollars), compared with only 31% in the last year of prosperity before the onset of the Great Depression. By the end of the decade, 87% of families owned a TV set, 75% a car, and 75% a washing machine. Between 1947 and 1960, the average real income for American workers increased by as much as it had in the previous half-century.
American Manufacturing
One of the key factors in postwar prosperity was a technology boom due to the experience of the war. Manufacturing had made enormous strides and it was now possible to produce consumer goods in quantities and levels of sophistication unseen before 1945. Acquisition of technology from occupied Germany also proved an asset, as it was sometimes more advanced than its American counterpart, especially in the optics and audio equipment fields. The typical automobile in 1950 was an average of $300 more expensive than the 1940 version, but also produced in twice the numbers. Luxury makes such as Cadillac, which had been largely hand-built vehicles only available to the rich, now became a mass-produced car within the price range of the upper middle-class.
Women in the 1950s
Aside from the unfolding Civil Rights Movement, women had been forced out of factories at the end of WWII for returning veterans and many chafed at the social expectations of being an idle stay-at-home housewife who cooked, cleaned, shopped, and tended to children. Alcohol and pill abuse was not uncommon among American women during the 1950s, something quite contrary to the idyllic image presented in TV shows such as Leave It To Beaver, The Adventures of Ozzie and Harriet, and Father Knows Best. In 1963, Betty Friedan publisher her book The Feminine Mystique which strongly criticized the role of women during the postwar years and was a best-seller and a major catalyst of the women's liberation movement. Sociologists have noted that the "idle housewife" of the 1950s was the exception in American history rather than the norm, where women generally did work or labor in some capacity.
Poverty and Inequality
Despite the prosperity of the postwar era, a significant minority of Americans continued to live in poverty by the end of the Fifties. In 1947, 34% of all families earned less than $3,000 a year, compared with 22.1% in 1960. Nevertheless, between one-fifth to one-fourth of the population could not survive on the income they earned. The older generation of Americans did not benefit as much from the postwar economic boom especially as many had never recovered financially from the loss of their savings during the Great Depression. It was generally a given that the average 35-year-old in 1959 owned a better house and car than the average 65-year-old, who typically had nothing but a small Social Security pension for an income. Many blue-collar workers continued to live in poverty, with 30% of those employed in industry in 1958 receiving under $3,000 a year. In addition, individuals who earned more than $10,000 a year paid a lower proportion of their income in taxes than those who earned less than $2,000 a year. In 1947, 60% of black families lived below the poverty level (defined in one study as below $3000 in 1968 dollars), compared with 23% of white families. In 1968, 23% of black families lived below the poverty level, compared with 9% of white families.
U.S. GDP from 1920-1940
GDP annual pattern and long-term trend, 1920–40, in billions of constant dollars. The dramatic drop in GDP during the depression had recovered by 1937 and by 1940 was rising steeply to unprecedented numbers.