|Business cycles in U.S. since world war II
At the end of the World war ΙΙ in 1945, economists and politicians were concerned about preventing economy’s sliding into another recession. To achieve this goal, the Congress of United States adopted the Employment Act in 1946, which required the Government to take all possible measures to prevent a recession and a depression. .But instead of entering another depression, American economy began to seriously grow. In post-war period, economy’s expansion was interrupted by only a few relatively short and mild recessions. None of the five reductions in the period between 1945 and 1970 didn't last more than a year, while 18 of 22 previous cyclical reductions according to the NBER lasted more than a year. The largest decline of real GDP during that period compose 3.3% during the recession of 1957-1958, (Figure Fredd3.2) but throughout this period, the level of unemployment never exceeded 8.1% of total labor force. (Figure Fred 3.3)
Fig. Fredd 3.2
Fig. Fredd 3.3
Again, the relationship between economy and war manifested itself during the Korean war, 1949-1953, and the last, most powerful stage expansion of 1961-1969, occurred in the period of military development during the Vietnam war. Due to there were no any serious recessions between 1945 and 1970, some economists suggested that the business cycle has been suppressed. This viewpoint was especially popular during the 106-month expansion in 1961-1969., which explained not only a high growth rate in military outlay during the Vietnam war, but also macroeconomic policies of presidents Kennedy and Johnson.
Soon after the Organization of petroleum exporting countries (OPEC) in the fall of 1973, increased four times oil prices, economy of the United States and of many other countries fell into serious recession. During the recession of 1973-1975 real GDP in the United States decreased by 3.4%, and the unemployment rate reached 9%, severe recession. Disadvantage was inflation, which decreased during most of previous recessions, jumped to unprecedented double digit values. Inflation remained a problem, and in the late 1970 's, even when the economy was restored after the 1973-1975 recession. Still more evidence that the business cycle is not dead, after a serious recession in 1981-1982. This decline which lasted for 6 months reached the same depth as the recession of 1973-1975., and the unemployment rate reached (11% figure of Fred), the largest value in the post-war period. Many economists affirmed. That Federal Reserve deliberately spawned this recession to reduce inflation. Inflation fell dramatically, from 11 to less than 4% per year. However, the growth after the recession was small.