1970s Economic Crisis

The Oil Embargo

• Nixon requested aid to support Israel in Yom Kippur War

• US was getting most of its oil from OPEC, many of which were Arab nations, some of which were at war with Israel, so OPEC restricted oil imports and cut oil reduction, increasing prices by 300%

• Soon US was not getting its essential needs

• Made producing and shipping goods more costly because less oil was available

• So companies produced fewer goods and services

• So price of everything went higher

• women entered the work force to help support families

• The government tried to help the nation through the crisis by issuing fuel rations and required companies to make more fuel efficient products

A Decline in American Manufacturing

• other countries were recovering from WWII and their economies were pretty good, so there was increased competition for American businesses

• used strategies to make products more cheaply and easily in long run, but also meant that there were fewer factories and therefore fewer workers needed in the short run

• loss of jobs made rise in prices even harder for citizens

• the government protected from foreign competition by restricting trade. Increased taxes on foreign goods and limited the number of foreign goods to encourage citizens to buy US made goods

• Offered job training to help unemployed workers affected by the decline in manufacturing

Stagflation resulted

• inflation was going up and unemployment rates went up