Economics in the 1970 s Stagflation the Energy

Between 1967 & 1973, inflation & unemployment increased. This is known as STAGFLATION, which

Unemployment also increased because trade competition intensified as the West German, Korean and Japanese

Inflation increased for 2 main reasons… First, more government spending on social programs (the

2 nd, was the nation’s dependency on foreign oil. The U. S. received much

During the 1960’s, OPEC gradually raised oil prices, largely by purposely limiting supply 1

Then, in 1973, a war broke out, with Israel against Egypt & Syria The

The OPEC nations sided with Egypt & Syria. They stopped selling oil to the

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Economics in the 1970 s Stagflation & the Energy Crisis

Between 1967 & 1973, inflation & unemployment increased. This is known as STAGFLATION, which had several causes such as AUTOMATION. The growth of automation caused a decrease in manufacturing jobs over time, increasing the number of people working in the service industry.

Unemployment also increased because trade competition intensified as the West German, Korean and Japanese economies began to boom. This made it harder for Americans to sell their goods overseas. The nation also had trouble finding jobs for millions of baby boomers who reached working age.

Inflation increased for 2 main reasons… First, more government spending on social programs (the Great Society) and the war in Vietnam caused deficit spending.

2 nd, was the nation’s dependency on foreign oil. The U. S. received much of its oil from the Middle East. Many of these countries belonged to a cartel called OPEC (Organization of Petroleum Exporting Countries).

During the 1960’s, OPEC gradually raised oil prices, largely by purposely limiting supply 1 st OPEC Conference, Baghdad, September 10– 14, 1960

Then, in 1973, a war broke out, with Israel against Egypt & Syria The U. S. sent military aid to Israel.

The OPEC nations sided with Egypt & Syria. They stopped selling oil to the U. S. Between the fall of ’ 73 & March ’ 74, motorists faced long lines at the gas pumps. Some factories & schools closed. When OPEC started selling oil to the U. S. again, the price had quadrupled.