Postwar Economic Boom

The 15 years following the end of World War II comprised a period of remarkable economic growth for the United States. Despite widespread fears among economists and public officials, a recurrence of the Great Depression did not materialize. The postwar boom in America was fueled by a number of factors. First, long-unsatisfied demand for consumer products coupled with massive savings created a huge market, a market that was sustained by unparalleled population growth. Second, World War II had expanded and modernized American industry. At war's end, plants converted from military to civilian production and began producing increasingly cheap, high-quality products. Third, technical innovations enabled old industries to produce new, improved products and led to the establishment of new enterprises in electronics and plastics. Fourth, worker productivity increased dramatically and steadily during these years. Fifth, after an initial downturn, government spending on a burgeoning foreign aid program and the Korean War stimulated the private sector.

From 1945 to 1947, pent-up consumer demand and savings more than compensated for reductions in government spending, which dropped from an annual rate of $100.5 billion for 1944 to $44.8 billion by the end of the 1940s. The economy lost steam in 1948, as Americans at last satiated their demand for items such as automobiles and refrigerators that were denied them during World War II. As manufacturing stockpiles grew, so did unemployment. Inflation, slowed but not controlled by Truman's policies, added to the nation's economic woes.