Download US Economy I

21 September 2015
by
Sigrid Brevik Wangsness
I. 18th Century
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Economic reasons for the
War of Independence
(1775-1783)
Agriculture as the main economic activity
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1
The Industrial Revolution and development
of a modern economy
How can we explain the tremendous growth
of the US economy since the early 19th
century?
6 The free-enterprise system (Adam Smith)
2
7
3
8
4
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5
10
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Focus on opportunity to succeed through:
1.
2.
3.
4.
◦ Poor immigrant from Scotland
◦ From factory worker to one of
the richest men in the world
◦ Founded a steel company,
consolidated the steel industry
◦ A philanthropist
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a)
b)
b)
Development of corporations
Why did corporations replace many
family businesses and partnerships in
the US?
How did the giant corporations develop?
Consolidation in major industries: oil,
steel, railroads

To what extent did the US government
intervene in the economy in the 20th
century?
1. Early 20th century
o Tariffs
o Trust busting
o 1913: The Federal Reserve (The Fed)
2. The Roaring 20s
o Growth in mass production and consumption
o Prohibition
o Speculation on the stock market
3. The crash in October 1929
o Why?
4.The Depression of the 1930s
o 25% unemployment, extreme poverty
5. The New Deal
o The election of Franklin D. Roosevelt in 1932
• Creating jobs
• Social Security
• Regulation of finance
o The three Rs:
• Relief
• Recovery
• Reform
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Roosevelt was influenced by a new economic
theory: A managed economy
John Keynes:
The General Theory of
Employment, Interest
and Money (1937)
6. World War II
o Government control of large parts of the economy
o Full employment
o Consensus
7. The Post-War Period
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How has Big Business profited from cooperation with the US government?
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Major growth of the US economy from
1945-1970
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World economic dominance
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Sustained growth in the 50s and 60s
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Consolidation in the 60s
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Mid-1970s: Stagflation and recession
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New economic theory: Monetarism
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Milton Friedman – the ”Chicago school” of
economics
”Supply-side” economic theory (1970s/80s)

1980s: The decade of the Yuppies
Economic growth, but at a slower
pace towards the end of the
period.
Ronald Reagan: 1980-88
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Continued shift in the workforce from
manufacturing to services and high-tech.
Declining number of workers, but increased
production and efficiency.
Development of conglomerates and
multinationals.
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From being the world’s biggest creditor the
US became the biggest debtor.
Foreign investment inside the USA became
greater than US investment abroad.
Deregulation: fewer restrictions and less
government intervention
1987: Stock market crash.
World recession
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1990 - 1992: Recession. George Bush Sr.
Signs of recovery at the end of
his term.
1993 - 2000: Growth. Boom.
Bill Clinton.
Eight years of uninterrupted
growth. Signs of decline at the
end of his term.
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2000/2001: "The new economy” (dot.com shares)
"A bubble economy”?
The IT bubble burst:
Prices of IT shares dropped dramatically
A major slowdown of the US economy
Sectors of the economy sliding into recession
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September 11th 2001
2002 - early 2003: Signs of recovery, but
sluggish
2003 - 2007: Relative growth (GDP: 2.6% in
2007), stability and relatively
low unemployment (4.7% in
2007).
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2008 – 2009: Financial crisis. Recession
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2009 - 2013: Slow recovery
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2014: 2.5% growth, but economic
data difficult to interpret.
2015: Better than it looks?