Driven by growing consumer demand, as well as the continuing expansion of the military-industrial complex as the Cold War ramped up, the United States reached new heights of prosperity in the years after World War II.
It was, and remains, a politically potent lie. It is undercut by the real story of how America engineered its Golden Era of shared prosperity — the great middle-class expansion in the decades after World War II.
A housing boom, stimulated in part by easily affordable mortgages for returning servicemen, fueled the expansion. The rise in defense spending as the Cold War escalated also played a part. After 1945 the major corporations in America grew even larger.
Following World War II, the United States emerged as one of the two dominant superpowers, turning away from its traditional isolationism and toward increased international involvement. The United States became a global influence in economic, political, military, cultural, and technological affairs.
The private economy boomed as the government sector stopped buying munitions and hiring soldiers. Factories that had once made bombs now made toasters, and toaster sales were rising. On paper, measured GDP did drop after the war: It was 13 percent lower in 1947 than in 1944.
But as of 1989, when the Iron Curtain fell, globalization became a truly global phenomenon. In the early decades after World War II, institutions like the European Union, and other free trade vehicles championed by the US were responsible for much of the increase in international trade.
The Rise of Consumerism
One of the factors that fueled the prosperity of the '50s was the increase in consumer spending. Americans enjoyed a standard of living that no other country could approach. The adults of the '50s had grown up in general poverty during the Great Depression and then rationing during World War II.
Many businesses moved from the production of consumer goods to the production of war supplies and military vehicles. American companies began producing guns, planes, tanks, and other military equipment at an unbelievable rate. As a result, there were more jobs available, and more Americans went back to work.
America's response to World War II was the most extraordinary mobilization of an idle economy in the history of the world. During the war 17 million new civilian jobs were created, industrial productivity increased by 96 percent, and corporate profits after taxes doubled.
World War II was one of the transformative events of the 20th century, causing the death of 3 percent of the world's population. Deaths in Europe totaled 39 million people — half of them civilians. Six years of ground battles and bombing resulted in widespread destruction of homes and physical capital.
The post-Second World War economic boom was an era of considerable prosperity that followed the recovery period and ended with the 1973-1975 Recession. These years are also referred to as the "Golden Age of Capitalism" in the West, although Eastern Europe and parts of Asia also saw significant growth in these years.
However, by the end of World War II, the pound could no longer compete. War, decolonization, and declining economic strength abroad dealt a lasting blow to the United Kingdom and ushered in a new era of American dominance in the arena of global influence and economic strength.
A post-war rise in unionism, the passage of the GI Bill, a housing program, and other progressive actions led to a doubling of the median family income in only 30 years, creating a middle class that included nearly 60 percent of Americans by the late 1970s.
Overview. During the Gilded Age, male and female office workers expanded the ranks of the middle class. Larger incomes and increased leisure time among middle- class workers fostered a culture of consumption and popular amusements in American cities.
The increase in marriages and births after World War II led to a greater demand for homes and items for the home. In the first four years after the war, Americans moved into over one million new homes annually. Spending on furniture and appliances increased by 240%.
Second, the middle class grew. The growth of the businesses and factories created more jobs. The middle class assumed the occupations of merchants, shopkeepers and accountants. They were able to take advantage of affordable amenities like furniture and fine clothing.
The war production effort brought immense changes to American life. As millions of men and women entered the service and production boomed, unemployment virtually disappeared. The need for labor opened up new opportunities for women and African Americans and other minorities.
The war had stripped Britain of virtually all its foreign financial resources, and the country had built up “sterling credits”—debts owed to other countries that would have to be paid in foreign currencies—amounting to several billion pounds. Moreover, the economy was in disarray.
After World War II, Germany was also facing shortages in food, housing, energy, and more. These shortages contributed to the collapse of Germany's currency and development of a black market in which prices were approximately between 20 and 100 times their legal prices.
Though during the early 1950s the American economy was negatively affected by inflation—prices were rising, currency was losing its value, and a recession was at hand—these problems were relatively short-lived. By the mid-1950s, the nation began to enjoy the fruits of economic boom and prosperity.
What factors contributed to the economic and population growth of the 1950s? Economic: GNP soared 250% and per capita income increased. People bought more commercial products (TV, radios) Population: Baby boom (Marriage rate lower) Culture of the time was for larger families.
Best of all, the 1950s were an era of economic growth, prosperity and upward mobility for those willing to work hard and persevere. An era before mega-government and mega-corporations, in the 1950s you could call a government office or a business and reach a human being rather than a recorded voice.
The United States benefited the most from WWII as it had a large population, technological prowess, and the capital necessary to change WWII machinations into business and industry that benefited the civilian. Europe saw great growth post-WWII; it just happened slower than it did in the United States and Japan.
Many civilians died because of deliberate genocide, massacres, mass-bombings, disease, and starvation. The Soviet Union lost around 27 million people during the war, including 8.7 million military and 19 million civilians.
A strong and prosperous middle class is crucial for any successful economy and cohesive society. The middle class sustains consumption, it drives much of the investment in education, health and housing and it plays a key role in supporting social protection systems through its tax contributions.