Ford and Carter and the Economy
- Created by: tomtom11
- Created on: 24-05-16 13:37
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- The Economy in the '70s
- Effects on income
- Inflation 5% in '77/ 10% by '78
- Cost of living doubled between '68 and '78- continued to rise 'till '82.
- Cost of borrowing money from banks = 20%
- Led to a drop in investment and a drop in house-buying.
- Price of McDonald's Burger cost 15 cents in '67- rose to 50 cents by '81.
- Between '72 and '78- industrial productivity rose by 1%
- Real incomes in the US fell 2% each year from 1973 to 1981.
- Stagflation
- inflation = 11%
- Unemployment was 9%
- There was a significant decline in manufacturing... wealthy areas moved from North East to West.
- States like New York and Michigan lost thousands of jobs.
- Growth in homelessness
- household debt rose, as did foreclosures.
- Poverty levels through the period remained a stable high at 12%
- Increased mechanisation in areas like the Mississippi Delta led to greater redundancies
- Areas dependant on textiles and mining suffered.
- '51- manufacturing provided Pennsylvania with 46% of its jobs
- This had fallen to 24% in 1977
- More than 20% of the population were on welfare in '70
- Reduction of taxes (57%) in California through Proposition 13 had serious impact on welfare.
- Oil and energy crisis
- OPEC x4'd the price of oil in '73
- Fall of the Shah of Iran led to doubling in price.
- Oil = $3 a barrel in '73 to $34 a barrel by '79.
- '79- 58% of US's petrol stations closed due to lack of petrol.
- '80- USA imported $80bn worth of oil.
- Nearly 90% of the population believed that inflation was a permanent feature of the US economy.
- OPEC x4'd the price of oil in '73
- Foreign competition
- '74- General Motors, Ford and Chrysler had laid of 224,000 workers.
- Chrysler faced bankruptcy and only survived through a federal bailout.
- Government response
- Ford attempted voluntary wage restrain policy (failure)
- Whip Inflation Now (WIN)
- Ford cut federal spending to curb rising prices.
- Carter also cut taxes, but also introduced public works schemes.
- ('77) introduced Public Works Act- stimulus package to get economy back on track.
- Included $4bn Public Works Scheme + enlarged other social policies.
- Earned Income Tax Credit- programme of tax credits for low-income families.
- Expanded means-tested food stamp programme
- '80- 21m ppl on welfare supported.
- National Energy Plan announced deregulation of Natural Gas prices.
- Department of Energy created- promoted conservation of domestic oil reserves +speed limits on cars to reduce fuel consumption.
- US energy consumption fell by 10% between '79 and '83.
- Carter introduced the Airline Deregulation Act of '78
- abolished the Civil Aeronautics Board to make airlines more competitive.
- This had little effect on the problems facing Carter.
- abolished the Civil Aeronautics Board to make airlines more competitive.
- '78- unemployment dropped to 5%
- inflation had risen from 6% in '77 to 10% in '78.
- Carter achieved 26% approval rating in the polls.
- Carter provided research into renewable energy, but this did nothing to curb the economic problems he faced.
- By '80
- Stagflation
- Unemployment at 7.5%
- mortgage rates at 15%
- Interest rates at 20%
- Inflation averages 12-13%
- Effects on income
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