ECO 202Economy in the 1960sJoseph ArochoECO 202Dr. Akhmedjonov
ECO 202Decade Overview•The 1960s were the longest uninterrupted period of economic expansion in history•However from 1960-1961 the country was in a recession•President John F. Kennedy, being elected in 1961, worked towards accelerating economic growth •By 1963 inflation rate was stable again, the stock market was recovering, however unemployment rate was at 5.7 %•Although Kennedy was assassinated, much of his legislative goals were enacted•Lyndon Johnson helped increase federal spending and helped launch programs such as Medicare, Food Stamps, and many education initiatives•War stirs in Vietnam, 3.5k Americans soldiers are shipped off in 1965•The inflation rate continued to fluctuate •With Richard Nixon’s election in 1969, federal spending was trimmed and the inflation rate had reached a high 6.5%.
ECO 202Real GDP 1960-1970
ECO 202Events that Helped Shape the US Economy in the 1960s•Kennedy Tax Cut of 1964•Vietnam War•Tax Surcharge and Spending Cut of 1968
ECO 202Inflation Consumer Price Index
ECO 202Unemployment in the 1960s
ECO 202Interest Rates
ECO 202Early Fiscal Policy •1960-1961 recession, suppressed by automatic stabilizers•Beginning of the decade was very expansionary economically•Federal tax liabilities were lowered through depreciation reform•Large reduction in personal and corporate taxes•Kennedy Tax Cuts (1964)•Increases in expenditures during the first half of the decade •1964- Economic Opportunity Act ”War on Poverty”
ECO 202Fiscal Policy Actions•Keynesian Economics along with strong expansionary policies allowed for strong years under not only Kennedy but President Johnson as well•Tax Reductions in 1964-1965•Federal Spending on the Vietnam War starting in middle of decade•Increased GDP•Created Jobs•1965 Johnsons Great Society
ECO 202Fiscal Policy ImpactUnemploymentInflation (CPI)Real GDP•Overall Trends consistent throughout decade in unemployment rate and inflation•Real GDP fluctuated with changes in federal spending
ECO 202Early Monetary Policies of the Decade•1958The Bretton Woods System becomes fully functional. •1959Interest rates are raised•1960Open Market Operations•1961Operation Twist•1965Interest rates are raised•1966Interest rates are raised once again.
ECO 202Decade Policy Actions•Mix of restrictive and contractionary monetary policies to not only curbe inflation, but increase GDP•Monetary polices replaced with fiscal policies•Numerous increases of interest rates•Open Market Operations•Operation Twist•Bretton Woods Federal Funds Rate