Great Depression in the United States
The Great Depression began in August 1929, when the United States economy first went into an economic recession. Although the country spent two months with declining GDP, it was not until the Wall Street Crash in October 1929 that the effects of a declining economy were felt, and a major worldwide economic downturn ensued. The stock market crash marked the beginning of a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes, and lost opportunities for economic growth as well as for personal advancement. Altogether, there was a general loss of confidence in the economic future.
History of the United States (1964–1980)
Inflationary pressures led to key shifts in economic policies. Following the Great Depression of the 1930s, recessions—periods of slow economic growth and high unemployment—were viewed as the greatest of economic threats, which could be counteracted by heavy government spending or cutting taxes so that consumers would spend more. In the 1970s, major price increases, particularly for energy, created a strong fear of inflation; as a result, government leaders concentrated more on controlling inflation than on combating recession by limiting spending, resisting tax cuts, and reining in growth in the money supply. The erratic economic programs of the Nixon administration were indicative of a broader national confusion about the prospects for future American prosperity. Nixon and his advisers had a poor understanding of the complexities of the global economy (Henry Kissinger once confessed that economics were mostly a blank spot to him) and all of them belonged to the generation that came of age during the New Deal era and believed strongly in government intervention in the economy. They preferred quick, dirty, short-term fixes to complex economy issues. These underlying problems set the stage for conservative reaction, a more aggressive foreign policy, and a retreat from welfare-based solutions for minorities and the poor that would characterize the subsequent decades.