Recession of 1958

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The Recession of 1958, also known as the Eisenhower Recession, was a sharp worldwide economic downturn in 1958. [1] The effect of the recession spread beyond United States borders to Europe and Canada, causing many businesses to shut down. [2] It was the most significant recession during the post-World War II boom between 1945 and 1970 and had a sharp economic decline that only lasted eight months. By the time recovery began in May 1958, most lost ground had been regained. As 1958 ended, the economy was heading towards new high levels of employment and production. Overall, the recession was regarded as a moderate one based on the duration and extent of declines in employment, production, and income. [1]

In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending. This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble. In the United States, it is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.

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World War II, also known as the Second World War, was a global war that lasted from 1939 to 1945. The vast majority of the world's countries—including all the great powers—eventually formed two opposing military alliances: the Allies and the Axis. A state of total war emerged, directly involving more than 100 million people from more than 30 countries. The major participants threw their entire economic, industrial, and scientific capabilities behind the war effort, blurring the distinction between civilian and military resources. World War II was the deadliest conflict in human history, marked by 70 to 85 million fatalities, most of whom were civilians in the Soviet Union and China. It included massacres, the genocide of the Holocaust, strategic bombing, premeditated death from starvation and disease, and the only use of nuclear weapons in war.

Contents

Causes

There were many major factors in the decline that exerted a growing downward pressure on production and employment, resulting in a general reduction of economic activity. [1]

Edsel company

Edsel is an automobile marque that was planned, developed, and manufactured by the Ford Motor Company for model years 1958 through 1960. With the Edsel brand, Ford had expected to make significant inroads into the market share of both General Motors and Chrysler and close the gap between itself and GM in the domestic American automotive market. Ford invested heavily in a yearlong teaser campaign leading consumers to believe that Edsels were the cars of the future – an expectation they failed to meet. After being unveiled to the public, they were considered to be unattractive, overpriced, and overhyped. Edsels never gained popularity with contemporary American car buyers and sold poorly. The Ford Motor Company lost $250 million on Edsel development, manufacturing, and marketing.

Consequences

Price and costs

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Government actions

Government efforts to promote a prompt economic recovery played an important role in the moderation of the recession. Dwight D. Eisenhower, Raymond J. Saulnier, Robert B. Anderson, and Lyndon B. Johnson were some of the important figures playing major roles in this effort. Eisenhower’s main focus was to stimulate recovery while keeping the government’s financial “house in order”. [3]

Dwight D. Eisenhower 34th president of the United States

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Raymond Joseph Saulnier was an American economist, who was Chairman of the Council of Economic Advisers (CEA) from 1956 to 1961 under President Dwight David Eisenhower. He was born in Hamilton, Massachusetts.

Robert B. Anderson American politician

Robert Bernard Anderson was an American administrator and businessman. He served as the Secretary of the Navy between February 1953 and March 1954. He also served as the Secretary of the Treasury from 1957 until 1961, and was one of President Eisenhower's closest confidants. Two years before his death from cancer, he was disbarred for illegal banking operations and tax evasion.

By the end of the recession, the index of industrial production was 142% of the 1947 to 1949 average. Total employment had increased by about 1 million from its recession low while unemployment had been reduced by 1 million. Income and expenditures of individuals were at new high levels. Gross National Product, the broadest measure of the nation's output of goods and services, had risen to an annual rate of $453 billion. [1]

Officially, recessionary circumstances lasted from the middle of 1957 to April 1958. [3]

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References

  1. 1 2 3 4 5 6 7 8 9 "The Economic Report of the President" (PDF). Monthly Labor Review. The American Presidency Project. U.S. Government Printing Office. 82 (3): 1–225. 1959. Retrieved 20 Oct 2014.
  2. 1 2 3 "The Recession of 1958 - Photo Essays". January 1, 2008. Retrieved November 5, 2014.
  3. 1 2 3 4 5 6 7 8 9 10 11 McClenahan, William M.; Becker, William H. (2011). Eisenhower and the Cold War Economy. Baltimore: Johns Hopkins University Press. ISBN   978-1-4214-0265-9.

Further reading