impact of economic change

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  • IMPACT  OF ECONOMIC CHANGE
    • INFLATION
      • 1977 Carter took office 5%, one year doubled to 10%
        • 1978: poll showed 68% of people saw inflation as greatest concern
      • made everything more expensive
        • July 1974 alone prices rose by 3.7%
        • cost of living rose on average 8.2% per year 1973-1983
        • Mcdonalds burger cost 15 cents in 1967 rose to 50 cents in 1981
    • SLUGGISH GROWTH + STAG-FLATION
      • Industrial production rose 1% 1972-1978 compared to 3.2% 1948-1955
        • economic rivals - Japan and Germany
          • productivity levels 4-5%
      • inflation stood at 11% but un-employment rose to 9%
        • family incomes and living standards fell
          • US standard of living  fell to 5th in world
        • stagflation = increased poverty levels
          • no. under poverty line rose from 11.2% in 1974 and 12.5% to 1976
          • eligibility for food stamps rose from 18.5 million 1976 to 20 million in 1980
    • HOMELESS-NESS
      • Inflation and rising un-employment caused household debt to rise rapidly
        • foreclosures by banks and increased homelessness
      • Philadelphia hit bad
        • 1951 manufacturing provided 46% of jobs
          • hit hard by unemployment cuasing to drop t 24% in 1977
        • no. welfare jumped from 20,000 1970 to 340,000 1980
          • more than 20% of the population
      • stagflation = increased poverty levels
        • no. under poverty line rose from 11.2% in 1974 and 12.5% to 1976
        • eligibility for food stamps rose from 18.5 million 1976 to 20 million in 1980
    • OIL CRISIS
      • contributed to stagflation
        • Yom Kippur War of 173 led to OPEC oil embargo on US
          • 387% increase in price of oil
        • rose from $3 a barrel 1973 to $34 in summer 1979
      • 13th June 1979 - 58% of USA petrol stations closed
      • america hit hardest as greatest consumer of oil
        • 1970 imported $4 billion by 1980 this reached $80 billion
      • huge effect on economy
        • GNP dropped 2.5% in first 3/4 of 1973
          • fell another 3.2% winter of 1974-1975
        • 90% of US citizens believed inflation was permanent part of US economy
    • FOREIGN COMP-ETITION
      • US car industry hit hard
        • inexpensive and well made Japanese cars appealed to public
          • 1981: Japanese companies had 23% of US auto mobile market
        • West Germany and Japanese cars has better fuel consumption
        • 1974, Chrysler, Ford and General Motors laid of 224,000 workers
          • 1980: Chrysler faced bankrupcy
            • only survived through federal bailout of $1.3 bn.
          • car imports rose by 1/3
      • European Economic Community set up in 1957 with 9 countries
        • trading block which rivalled US foreign trade
          • electronics facing European competition
            • philips and Siemen
      • due to foreign comp
        • industrial plants closed or relocated to other areas of US with cheaper labour costs
          • 1967 2/3 manufacturing in northeast and midwest by 1982 dropped to 50%
          • rust belt to sun belt  (south and west)
          • distribution of wealth moved to places for agriculture

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