Changes in the Changes in the American American Economy: Economy:

The Energy Crisis, The Energy Crisis, DeindustrializationDeindustrialization

, and the Service , and the Service Economy Economy

Clarifying QuestionsClarifying Questions All the notes you take need to help you answer the All the notes you take need to help you answer the

clarifying questions below. As you clarifying questions below. As you analyzeanalyze and and evaluateevaluate the information contained throughout this the information contained throughout this presentation you should be asking yourself the presentation you should be asking yourself the following questions:following questions:

How and why was the U.S. economy How and why was the U.S. economy transformed during the 1970s? transformed during the 1970s?

Was the economic transformation experienced Was the economic transformation experienced by the U.S. harmful of helpful? [Explain]by the U.S. harmful of helpful? [Explain]

[I will not collect your answers but they should help you [I will not collect your answers but they should help you think about the information. If you have any think about the information. If you have any questions please share them with me and your questions please share them with me and your classmates before, during and after classes.]classmates before, during and after classes.]

StagflationStagflation Throughout 1970s, the American Throughout 1970s, the American

economy was plagued by the economy was plagued by the unprecedented combination of unprecedented combination of soaring prices, the high soaring prices, the high unemployment, and low economic unemployment, and low economic growth. growth.

Economists dubbed the Economists dubbed the phenomena "Stagflation," a period phenomena "Stagflation," a period of rising prices in a stagnant of rising prices in a stagnant economy. economy.

The high standard of living in the The high standard of living in the US following World War II US following World War II suddenly began to lag behind that suddenly began to lag behind that of Western Europe and Japan. of Western Europe and Japan.

Americans found it increasingly Americans found it increasingly difficult to sustain a middle class difficult to sustain a middle class lifestyle.lifestyle.

StagflationStagflation

Compare the rates of inflation between 1972 and 1980 to those of the 1980s and 1990s.

StagflationStagflation

GDP measures the total market value of all the goods and services produced within a region. Note the sharp decline in GDP beginning in 1973.

StagflationStagflation

In 1975, unemployment reached almost 9%, the highest level since the Great Depression at that time.

The Oil Crisis BeginsThe Oil Crisis Begins

By the late 1950s, the demand for oil in the United States By the late 1950s, the demand for oil in the United States outstripped domestic production capabilities. outstripped domestic production capabilities.

By 1970s, the US imported a third of its oil, making the American By 1970s, the US imported a third of its oil, making the American economy vulnerable to geopolitical upsets in the Middle East. economy vulnerable to geopolitical upsets in the Middle East.

The Oil Crisis BeginsThe Oil Crisis Begins On October 6, 1973, the Yom On October 6, 1973, the Yom

Kippur War began when Kippur War began when Egypt and Syria attacked Egypt and Syria attacked Israel from two sides.Israel from two sides.

The US airlifted supplies to The US airlifted supplies to

Israel, prompting OPEC to Israel, prompting OPEC to levy an oil embargo against levy an oil embargo against Israel's allies that lasted until Israel's allies that lasted until March 18, 1974. March 18, 1974.

The Oil Crisis BeginsThe Oil Crisis Begins

Gas prices suddenly doubled and fueling stations frequently ran out of Gas prices suddenly doubled and fueling stations frequently ran out of gas. gas.

The oil crisis effected almost every sector of the economy .The oil crisis effected almost every sector of the economy .

Coping with the Energy Coping with the Energy Crisis Crisis

The oil embargo led to The oil embargo led to dramatically increased prices dramatically increased prices for all types of fuel, including for all types of fuel, including gasoline, home-heating fuel, gasoline, home-heating fuel, and electricity. and electricity.

Prices for virtually everything Prices for virtually everything else rose in response to high else rose in response to high energy costs, causing record energy costs, causing record inflation. inflation.

Long lines for gasoline Long lines for gasoline became everyday became everyday occurrences.occurrences.

Coping with the Energy Coping with the Energy CrisisCrisis

President Nixon appealed to President Nixon appealed to the nation to make sacrifices in the nation to make sacrifices in the name of conserving energy. the name of conserving energy.

He warned that the country He warned that the country was "heading toward the most was "heading toward the most acute shortages of energy acute shortages of energy since World War II.”since World War II.”

The President asked Americans The President asked Americans to reduce air travel, reduce to reduce air travel, reduce work and school hours, turn work and school hours, turn down thermostats by 6 down thermostats by 6 degrees, and reduce highway degrees, and reduce highway speed limits to conserve speed limits to conserve energy.energy.

Coping with the Energy Coping with the Energy CrisisCrisis

Nixon also urged the use of Nixon also urged the use of coal and nuclear power coal and nuclear power rather than the limited rather than the limited commodity of oil.commodity of oil.

He asked Congress to He asked Congress to approve measures for approve measures for increased exploration and increased exploration and extraction of domestic oil and extraction of domestic oil and to relax environmental to relax environmental standards that impeded standards that impeded energy requirements.energy requirements.

Economic Policies of Economic Policies of President FordPresident Ford Gerald Ford inherited an economy Gerald Ford inherited an economy

in crisis when replaced Richard in crisis when replaced Richard Nixon in August 1974. Nixon in August 1974.

Ford lacked the economic vision Ford lacked the economic vision to curb the effects of stagflation.to curb the effects of stagflation.

Ford attempted to initiate a Ford attempted to initiate a grassroots anti-inflation grassroots anti-inflation campaign, but the Whip Inflation campaign, but the Whip Inflation Now (WIN) program was little Now (WIN) program was little more than a public relations more than a public relations maneuver. maneuver.

Skeptical Americans began Skeptical Americans began wearing the red and white WIN wearing the red and white WIN buttons upside down to stand for buttons upside down to stand for "No Instant Miracles." "No Instant Miracles."

After a few months, the WIN After a few months, the WIN effort was abandoned as sluggish effort was abandoned as sluggish industrial and business industrial and business productivity along with rampant productivity along with rampant unemployment compelled Ford to unemployment compelled Ford to focus on broader anti-recessionary focus on broader anti-recessionary measures.measures.

Economic Polices of Economic Polices of President FordPresident Ford

As a Republican, Ford believed As a Republican, Ford believed that a balanced federal budget that a balanced federal budget and reductions in government and reductions in government spending were the best way to spending were the best way to curb inflation. curb inflation.

Democrats in Congress favored Democrats in Congress favored increased federal spending as a increased federal spending as a stimulus to economic and job stimulus to economic and job growth. growth.

Ford admitted in 1975, “the state Ford admitted in 1975, “the state of the Union is not good.”of the Union is not good.”

Ford vetoed more major bills Ford vetoed more major bills than any president in the 20th than any president in the 20th century.century.

Despite the legislative battle, Despite the legislative battle, recessionary pressures eased recessionary pressures eased somewhat by 1976.somewhat by 1976.

DeindustrializationDeindustrialization "Deindustrialization" refers to "Deindustrialization" refers to

a shift away from a a shift away from a manufacturing-based economy.manufacturing-based economy.

In the United States and In the United States and Europe, deindustrialization has Europe, deindustrialization has preceded a shift to a service-preceded a shift to a service-based economy. based economy.

The trend toward The trend toward deindustrialization began in deindustrialization began in the 1960s and continues into the 1960s and continues into the present day, as the service the present day, as the service sector overtakes the sector overtakes the manufacturing sector.manufacturing sector.

DeindustrializationDeindustrialization

During the 1970s, the oil crisis and the falling productivity of the US During the 1970s, the oil crisis and the falling productivity of the US manufacturing sector sped the decline of several industries, including manufacturing sector sped the decline of several industries, including steel, automobiles, and electronics. steel, automobiles, and electronics.

The industrial production index measures the total output of US The industrial production index measures the total output of US factories. A decline in production indicates slow economic growth. factories. A decline in production indicates slow economic growth.

DeindustrializationDeindustrialization

Increases in foreign industrial efficiency allowed Europe, Asia, and Latin Increases in foreign industrial efficiency allowed Europe, Asia, and Latin America to effectively compete by producing quality goods for a lower America to effectively compete by producing quality goods for a lower cost. cost.

Many American companies began outsourcing labor to foreign countries Many American companies began outsourcing labor to foreign countries to remain competitive. to remain competitive.

This chart illustrates the balance of trade. The United States This chart illustrates the balance of trade. The United States increasingly imports more than it exports. increasingly imports more than it exports.

DeindustrializationDeindustrialization Structural unemployment Structural unemployment

often spikes during often spikes during deindustrialization. deindustrialization.

In this case, "structural In this case, "structural unemployment" refers to unemployment" refers to unemployment that occurs unemployment that occurs during the transition from a during the transition from a manufacturing to a service manufacturing to a service economy because workers lack economy because workers lack skills, education, experience, skills, education, experience, or proximity to the new types or proximity to the new types of jobs available.of jobs available.

The Decline of Organized The Decline of Organized Labor Labor

AFL-CIO lost over 4 million members between 1970 and 1982. Along with AFL-CIO lost over 4 million members between 1970 and 1982. Along with declining membership came decreased political power for organized labor. declining membership came decreased political power for organized labor.

Membership in AFL-CIO Unions

The Service EconomyThe Service Economy

Economies in the developed world typically change over time. Agrarian economies Economies in the developed world typically change over time. Agrarian economies first transition to industrial, then develop into service economies.first transition to industrial, then develop into service economies.

Service industries include retail, wholesale, banking, public utilities, Service industries include retail, wholesale, banking, public utilities, entertainment, etc.entertainment, etc.

This graph shows the eclipse of the manufacturing sector by the service sector by This graph shows the eclipse of the manufacturing sector by the service sector by the early 1980s. The trend toward deindustrialization resulted in a service-based the early 1980s. The trend toward deindustrialization resulted in a service-based economy. economy.

The Rustbelt and the The Rustbelt and the SunbeltSunbelt

The Rustbelt and the The Rustbelt and the SunbeltSunbelt

The economic region known The economic region known as the Manufacturing Belt as the Manufacturing Belt became known as the Rust became known as the Rust Belt by the 1970s, as Belt by the 1970s, as manufacturing and heavy manufacturing and heavy industry declined due to high industry declined due to high energy costs and foreign energy costs and foreign competition. competition.

Cities in the Rust belt were Cities in the Rust belt were subject to unemployment, subject to unemployment, underemployment in low-underemployment in low-paying service jobs, "white paying service jobs, "white flight" to the suburbs, and flight" to the suburbs, and general out-migration as general out-migration as manufacturing jobs moved manufacturing jobs moved south and abroad.south and abroad.

The Rustbelt and the The Rustbelt and the SunbeltSunbelt

Meanwhile, Sunbelt states in the West and Southwest continued to enjoy the Meanwhile, Sunbelt states in the West and Southwest continued to enjoy the economic growth trend spurred by Cold-War defense spending and an influx economic growth trend spurred by Cold-War defense spending and an influx of retirees. of retirees.

The South profited from a booming agribusiness industry and the The South profited from a booming agribusiness industry and the California's Silicon Valley became the hub of the technology industry. California's Silicon Valley became the hub of the technology industry.

As population in the Sunbelt increased, so did the region's political influence.As population in the Sunbelt increased, so did the region's political influence.

Working Women Working Women

High inflation, a series of High inflation, a series of recessions, and the changing recessions, and the changing role of women in society role of women in society encouraged more females to encouraged more females to enter the workforce enter the workforce throughout the 1970s. throughout the 1970s.

Working women became the Working women became the norm, as more households norm, as more households depended on two incomes. depended on two incomes.

Working WomenWorking Women Women, especially women Women, especially women

of color, continue to make of color, continue to make substantially less money substantially less money than their male than their male counterparts. counterparts.

Several factors account for Several factors account for this wage gap, including this wage gap, including discrimination and female discrimination and female concentration in low-wage, concentration in low-wage, non-union industries.non-union industries.

The Feminization of The Feminization of Poverty Poverty

Despite increased participation in the labor force and the Despite increased participation in the labor force and the progress made during the women's movement, women progress made during the women's movement, women experienced a decline in economic status during the 1970s. experienced a decline in economic status during the 1970s.

The Feminization of The Feminization of PovertyPoverty

Low pay and inflation combined with increased rates of divorce and Low pay and inflation combined with increased rates of divorce and teenage pregnancy led to a phenomena known as "the feminization of teenage pregnancy led to a phenomena known as "the feminization of poverty," as females became increasingly economically marginalized. poverty," as females became increasingly economically marginalized.

Economic Policies of Economic Policies of President CarterPresident Carter

As a rhetorical device during As a rhetorical device during 1976 presidential campaign, 1976 presidential campaign, Governor Jimmy Carter Governor Jimmy Carter combined the rate of inflation combined the rate of inflation (6%) and unemployment (8%) (6%) and unemployment (8%) into a "Misery Index" of 14. into a "Misery Index" of 14.

At first, Carter modeled his At first, Carter modeled his economic recovery program economic recovery program after FDR's New Deal by after FDR's New Deal by advocating tax cuts, public advocating tax cuts, public works, and employment works, and employment programs to stimulate the programs to stimulate the economy. economy.

The Democratic Congress The Democratic Congress responded with legislation in responded with legislation in accordance with the President's accordance with the President's plan, but as unemployment plan, but as unemployment decreased, inflation continued to decreased, inflation continued to rise.rise.

Economic Policies of Economic Policies of President CarterPresident Carter

In response, Carter tried an almost opposite approach. He attempted to In response, Carter tried an almost opposite approach. He attempted to curb inflation by slashing government spending, deregulating curb inflation by slashing government spending, deregulating industries, and implementing wage and price controls. industries, and implementing wage and price controls.

Many Democrats were alienated by what they perceived as a shift to the Many Democrats were alienated by what they perceived as a shift to the right in presidential policies. right in presidential policies.

Despite the President's sincere efforts, the "Misery Index" soon rose to Despite the President's sincere efforts, the "Misery Index" soon rose to 21. 21.

President Carter and the President Carter and the Continuing Energy Crisis Continuing Energy Crisis

Although the oil embargo had Although the oil embargo had ended and gas lines had ceased ended and gas lines had ceased by Carter's presidency, the by Carter's presidency, the threat created by US energy threat created by US energy dependence loomed on the dependence loomed on the horizon. horizon.

Carter characterized the Carter characterized the energy crisis as "the moral energy crisis as "the moral equivalent of war," which equivalent of war," which critics derisively nicknamed critics derisively nicknamed "meow." "meow."

His calls for sacrifice and His calls for sacrifice and conservation were opposed by conservation were opposed by the influential oil and auto the influential oil and auto industries, and accordingly the industries, and accordingly the subsequent National Energy subsequent National Energy Act of 1978 focused on Act of 1978 focused on increasing domestic production increasing domestic production rather than conservation. rather than conservation.

President Carter and the President Carter and the Continuing Energy CrisisContinuing Energy Crisis

Carter was successful in creating the Department of Energy as a cabinet-Carter was successful in creating the Department of Energy as a cabinet-level position, and he continued to try and set an example for citizens by level position, and he continued to try and set an example for citizens by conserving energy in the White House.conserving energy in the White House.

President Carter had solar panels installed atop the White House in 1979 President Carter had solar panels installed atop the White House in 1979 (which President Reagan later removed). (which President Reagan later removed).

President Carter and the President Carter and the Continuing Energy CrisisContinuing Energy Crisis

Following the 1979 Islamic Following the 1979 Islamic Revolution in Iran, Ayatollah Revolution in Iran, Ayatollah Khomeini stopped all oil shipments, Khomeini stopped all oil shipments, further exacerbating US energy further exacerbating US energy woes.woes.

In July the president delivered a In July the president delivered a televised address that became televised address that became known as the "Malaise Speech," in known as the "Malaise Speech," in which he entreats Americans to which he entreats Americans to share the responsibility of energy share the responsibility of energy conservation. conservation.

The public and the press responded The public and the press responded defensively and Carter's approval defensively and Carter's approval rating plummeted.rating plummeted.

Although the speech was a frank Although the speech was a frank diagnosis of the country's ills, diagnosis of the country's ills, Carter was criticized for "blaming" Carter was criticized for "blaming" the American people and offering the American people and offering few solutions. few solutions.

Reexamining the Clarifying Reexamining the Clarifying QuestionsQuestions

Now that you have Now that you have analyzedanalyzed and and evaluatedevaluated the the information in this presentation using the clarifying information in this presentation using the clarifying questions as a guideline how should you answer each questions as a guideline how should you answer each question using specific examples from what you have question using specific examples from what you have learned? [I will not collect your answers but they learned? [I will not collect your answers but they should help you think about the information. If you should help you think about the information. If you have any questions please share them with me and have any questions please share them with me and your classmates before, during and after classes.]your classmates before, during and after classes.]

How and why was the U.S. economy How and why was the U.S. economy transformed during the 1970s? transformed during the 1970s?

Was the economic transformation Was the economic transformation experienced by the U.S. harmful of helpful? experienced by the U.S. harmful of helpful? [Explain][Explain]

Photo and Graph CitationsPhoto and Graph Citations

Slide 2: Slide 2: http://www.time.com/time/covers/0,16641,19701214,00.html Slides 3-5: Slides 3-5: http://facstaff.bloomu.edu/wblee/macdata1.htm Slide 6: Slide 6: http://www.eere.energy.gov/vehiclesandfuels/images/facts/fotw376a.jpg Slide 7: http://www.businessweek.com/1999/99_40/70frame/70s.htmSlide 7: http://www.businessweek.com/1999/99_40/70frame/70s.htm Slide 8: Slide 8: http://inflationdata.com/inflation/images/charts/OilPrices.gif Slide 9: Slide 9:

http://images.encarta.msn.com/xrefmedia/sharemed/targets/images/pho/t049/T049147A.jpg Slide 10:Slide 10:http://img.timeinc.net/time/magazine/archive/covers/1973/1101731203_400.jpg Slide 11: Slide 11: http://tesla.liketelevision.com/liketelevision/images/lowrez/tdih1017.jpg Slide 12: Slide 12: http://money.cnn.com/2006/05/18/commentary/wastler/wastler/index.htm Slide 13: Slide 13: http://www.pbs.org/wgbh/amex/vietnam/whos/images/whos-ford.jpg Slide 14: http://www.library.pitt.edu/labor_legacy/deindustrializationDMS.htmSlide 14: http://www.library.pitt.edu/labor_legacy/deindustrializationDMS.htm Slide 15: Slide 15:

http://www.economagic.com/em-cgi/charter.exe/feddal/b00004+1969+1990+0+1+1+290+545++0

Slide 16: Slide 16: http://www.econedlink.org/lessons/EM208/images/chart3.gif Slide 17: Slide 17: http://www.library.pitt.edu/labor_legacy/images/deindustrializationBILL2.jpg Slide 18: Slide 18: http://www.afscme.org/images/ffch1.gif Slide 19: Slide 19: http://www.uaw.org/publications/jobs_pay/03/no1/pics/compare01.gif Slide 21: Slide 21: http://www.pacpubserver.com/new/news/images/roeblingmill.jpg Slide 22: Slide 22: http://wps.ablongman.com/wps/media/objects/31/32716/figures/DIVI712.jpg Slide 23: http://occawlonline.pearsoned.com/bookbind/pubbooks/martin_awl/medialib/Slide 23: http://occawlonline.pearsoned.com/bookbind/pubbooks/martin_awl/medialib/

download/MARTFIG304.gifdownload/MARTFIG304.gif Slide 24: http://www.breaktheglassceiling.com/images/graphs/narrowing-wage-gap.jpgSlide 24: http://www.breaktheglassceiling.com/images/graphs/narrowing-wage-gap.jpg Slide 25-26: http://www.bsos.umd.edu/socy/vanneman/socy441/trends/fert.htmlSlide 25-26: http://www.bsos.umd.edu/socy/vanneman/socy441/trends/fert.html Slide 27: http://img.timeinc.net/time/magazine/archive/covers/1976/1101761115_400.jpgSlide 27: http://img.timeinc.net/time/magazine/archive/covers/1976/1101761115_400.jpg Slide 28: http://www.house.gov/budget_democrats/images/presbudgets/fy2000/ch199.jpgSlide 28: http://www.house.gov/budget_democrats/images/presbudgets/fy2000/ch199.jpg Slide 29: Slide 29:

http://www.wku.edu/Library/onlinexh/sanders/cartoons/periscope/oneill_congress_perks.jpghttp://www.wku.edu/Library/onlinexh/sanders/cartoons/periscope/oneill_congress_perks.jpg Slide 30: http://www.radford.edu/~wkovarik/envhist/RenHist/3.solar.pix/U1968698-Slide 30: http://www.radford.edu/~wkovarik/envhist/RenHist/3.solar.pix/U1968698-

Carter.6.20.79.jpgCarter.6.20.79.jpg Slide 31: http://img.timeinc.net/time/magazine/archive/covers/1979/1101791126_400.jpgSlide 31: http://img.timeinc.net/time/magazine/archive/covers/1979/1101791126_400.jpg