The Economy

       The Vietnam War had ended in 1975 in the middle of the decade. America was suffering from many of the effects of the war such as shortage of supplies and resources. Problems began to arise and it the American people were becoming overwhelmed. Once the war was over citizens found it difficult to adjust to the new system of productivity. After nearly 20 years of what seemed to be a war that would never end. New problems arose including energy shortage, high inflation, and high unemployment.

      The lack of energy occurred because of a worldwide oil shortage. Nations around the world started to conserve their non-renewable oil supplies in hopes to have some still available in the near future. Nations started to depend on the Middle East for oil because of their sheer abundance of it. During this oil shortage, the Arab and Israel states had a war called the Yom Kippur War. The Arabs would lose because the west had helped out the Israelis. Due to this, out of frustration, the Arabs put and oil embargo on the west called the "Arab Oil Embargo." Of the participants were the world were the largest oil producers such as Saudi Arabia, Iraq, and Kuwait. The gas prices would sky rocket, quadruple even. This devastated the western economy including the Americans economy. This would lead to the Americas having stagflation. Stagflation is a portmanteau word used to describe a period with a high rate of inflation combined with an economic recession. This would bring the U.S. gas prices to go from 35 cents a gallon in the beginning of 1970 to around 90 cents near the end of the 70s. The embargo would end less than a year later in March of 1974 but the effects would stay till the end of the century.
      In the 1970s inflation rose to unfathomable rates. There was a mix of a high demand and a low supply of things such as jobs, houses, cars etc. An attribution to the extreme high inflation was that no one desired to be the Federal Reserve Chairman. Therefore there was no one in a positions to build a mandate to stop the inflation either. Prices only began to rise and rise. Another thing that caused inflation was that the investors and creditors had no confidence in the bank system. The lack of credibility and commitment cause inflation to rise. The three main reasons toward inflation are as follows.

1: The United States had a burst of inflation in the 1970s because up until the1980s there was no influential policy makers. This ended when Paul Volcker became Chairman of the Federal Reserve who placed a sufficiently high priority on stopping inflation.

2: The policies of the 1960s left economic policy makers of the 1970s with painful dilemmas. They were "Dealt with bad cards" These "bad cards" mixed with bad luck led to high inflation.

3: The last cause was that the great depression made it hard to believe that the business cycle was a fluctuation around rather than a shortfall below potential output and potential employment.

       Only to add to the economic problems the United States was faced were the high unemployment rates. High unemployment was a result of the women work force and a combination of returning soldiers from Vietnam. In 1869 the unemployment was comprised of about 80 million abled workers. By the end of the 70s, it was more than 96 million. This was an increase of over 16 million. It went from 3.3 percent unemployment to around 8 percent unemployment, nearly reaching another depression.

       The economy of the seventies was far from comfortable or easy. Dubbed with an oil embargo and a mix of other problems led the American nation close to another depression. The energy shortage was the start followed by high unemployment and inflation. The economy of the US during the seventies was a hard time for everybody in America.