By the 1970s, although the United States remained an economic powerhouse, the post-war economic boom began to suffer some erosion. No one single factor was responsible for this. American manufacturing began to face significant competition from abroad in basic areas like automobiles and electronics, particularly from Japan. Growing dependence on foreign oil was another issue, brought home most painfully first by the 1973 oil crisis, during which Arab states cut off supplies of oil to the United States in retaliation for American support of Israel’s actions during the 1973 “Yom Kippur War.” Another oil crisis took place in 1979 as an aftermath of the Iranian Revolution. In both instances, Americans suffered the unavailability of gasoline, long waits at filling stations, and severe anxiety over the continuation of the post-war materialistic lifestyle. Stagflation, the combination of economic stagnation with inflation, became the catch phrase of much of the 1970s, with interest rates reaching 20% in 1981. A recession occurred between 1973 and 1975. By the end of the decade, the crucial automobile industry had declined by one-third.
The 1980s, under President Ronald Reagan, brought massive deregulation of industries, and saw a steady rise in government debt. Industrial decline continued through this decade and the 1990s, as new international competitors came on the scene: Korea, and especially, China. The United States began a process of evolving a “new economy,” with greater emphasis on information technology and less of an emphasis on manufacturing. Despite the “Dot-com bubble of the late 20th century, this process is still going on, although the phenomenon is worldwide.
The 21st century again saw the United States go on a war footing as the country began its involvement in Iraq and Afghanistan following the terrorist attacks on the World Trade Center and the Pentagon of September 11, 2001. Military production, for domestic purposes and export, continues to support an important segment of the American economy. The United States also has the world richest and most productive agricultural lands and remains a major producer and exporter of food. As always, the entertainment industry is alive and well in the United States, with worldwide effect.
As the 21st century ended its first decade, significant credit, liquidity, and financial crises rocked the American business community, leading to bank failures and government “bailouts” of major corporations. Concurrently, a major “bust” in housing occurred, causing substantial losses in real estate values, foreclosures, and a sustained decline in homebuilding. These difficulties reverberated into the general economy, resulting in increased unemployment, recession, and the continued political issue of crushing governmental debt.
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