The Cold War (1945–1963)

As World War II drew to a close, many Americans worried about the domestic economy. Although the war had spurred employment and production and had pulled the nation out of the Great Depression, the war economy couldn't last forever. Moreover, millions of veterans would soon return home in search of jobs that might not be there anymore. As inflation soared, many feared that the immediate postwar recession of 1946 and 1947 heralded the return of the Great Depression.

Truman and Congress took steps to address the economic downturn. In 1946, for instance, Congress passed the Employment Act, which created the Council of Economic Advisors to help Truman maximize national employment.

During the recession, literally millions of industrial laborers went on strike to protest inadequate wages. Truman continued to support the labor unions as he had during the war, but conservatives feared that halting industrial production would severely cripple the economy. To remedy this problem, Republicans in Congress passed the Taft-Hartley Act in 1947, over Truman's veto, to restrict the influence of unions. The act outlawed all-union workplaces, made unions liable for damages incurred during interunion disputes, and required labor organizers to denounce Communism and take oaths of loyalty.

Perhaps the most important measure taken in combating the recession was the Montgomery G.I. Bill, which Congress had passed in 1944 to help the 15 million returning U.S. veterans reenter the job market. Also known as the Servicemen's Readjustment Act and the G.I. Bill of Rights, the G.I. Bill gave government grants to any veteran who wished to return to school. Neither Truman nor Congress predicted that more than half of returning veterans would take advantage of approximately $15 billion in federal grants to attend vocational schools, colleges, and universities. The G.I. Bill also set aside an equal amount of money to provide veterans with loans for new homes, farms, and businesses.

Historians have since hailed the Montgomery G.I. Bill as the most significant law passed to address the concerns of the postwar years. It reduced fierce competition for jobs after the war and boosted the economy by helping millions of workers acquire new skills. Many have claimed that the economic boom in the 1950s would never have happened at all without the G.I. Bill.

Indeed, the U.S. economy recovered quickly from the brief recession of 1946–1947 and then veritably exploded, making Americans the wealthiest people in the world. For approximately twenty years, the U.S. economic surge seemed unstoppable. Within just a few years, almost two-thirds of American families achieved middle-class status. Gross national product (GNP) more than doubled during the 1950s and then doubled again in the 1960s. By 1960, most American families had a car, a TV, and a refrigerator and owned their own home—an amazing achievement given that fewer than half of Americans had any of these luxuries just thirty years earlier.

Wartime industrial production and unprecedented defense spending during the 1950s and 1960s fueled the economic boom. Whereas the manufacturing infrastructures in Great Britain, France, and Germany had been destroyed by invasion and bombing, American industries had remained completely untouched and therefore benefited greatly from the war. Federal dollars—roughly half of the congressional budget in the 1950s and 1960s—later kept these war factories running throughout the Cold War. Low oil prices, along with Eisenhower's investment in transportation infrastructure with the Federal Highway Act in 1956, also boosted the nation's overall economic strength. Improvements in education thanks to the G.I. Bill also improved workers' productivity.

The shift in the economic base away from agriculture and manufacturing and toward “white-collar” jobs also contributed significantly to the postwar boom. By 1960, the family homestead that had once dominated American economic life even up to the turn of the twentieth century had all but disappeared. Instead, corporate “agribusinesses” had take over agricultural production by using machinery that was more efficient than farmhands. Similarly, white-collar workers rapidly began to outnumber “blue-collar” manual laborers for the first time in U.S. history. This transformation contributed to the decline of labor unions in the latter half of the twentieth century.

New scientific discoveries and technological developments also spurred the economic boom. Federal grants encouraged companies to invest in research and development to make production more efficient. Government money also subsidized the development of commercial airlines, which contributed significantly to the economy by transporting goods and people across the country within hours rather than days or weeks. The development of the transistor rapidly transformed the electronics industry and resulted in the formation of new technology corporations. Nutrition and public health also improved during these years. Jonas Salk's development of the polio vaccine in 1952, for example, effectively eliminated a disease that had killed and crippled hundreds of thousands of Americans in the past, including former president Franklin D. Roosevelt.

Meanwhile, the U.S. population redistributed itself geographically and grew dramatically during the postwar years. Improvements in transportation mobilized Americans: whereas the railroads of the Gilded Age had opened the West, interstates and airplanes developed it. During the 1950s and 1960s, millions of Americans left the East for the West, South, and Midwest. Federal grants to these regions contributed to their development. As a result, populations doubled, tripled, and even quadrupled in California, Arizona, New Mexico, Texas, Florida, and other so-called Sun Belt states. By the early 1960s, California had become the most populous state in the Union. On top of this migration, the postwar “baby boom” between 1945 and 1957 increased the U.S. population rapidly, as young Americans took advantage of the postwar peace and their increased wealth to start new families and have children.

Blacks, meanwhile, continued to move in large numbers from the South to northern and northeastern cities—a move that has become known as the African-American migration. The Great Depression, the invention of the mechanical cotton picker in the 1940s, World War II, and the prospect of jobs in northern cities prompted more than a million blacks to leave the South. This migration improved blacks' overall economic status and ultimately helped make the civil rights movement possible.

As blacks moved to the cities, many whites moved out of urban areas and into the suburbs. This pattern came to be known as “white flight.” New housing developments, higher incomes, G.I. Bill loans to veterans, and the construction of interstates all contributed to the massive growth of American suburbia during the 1950s. The rapid development of shopping malls and fast-food restaurants matched the growth of the suburbs. Amusement parks, credit cards, and the availability of cheaper consumer goods followed as well, and Americans quickly developed the world's foremost consumer culture.

Consumerism, in turn, prompted the entertainment industry to invent new ways for Americans to amuse themselves. By the mid-1960s, 90 percent of American families owned televisions, and more and more spent the bulk of their free time watching TV. Sitcoms, such as Leave It to Beaver, Ozzie and Harriet, and I Love Lucy, were particularly popular because they idealized the new American consumer lifestyle.

The new musical genre of rock and roll gained popularity among American youth. Sexually charged songs by artists such as Elvis Presley, Buddy Holly, Chubby Checker, and, later, the Beatles dominated the airwaves and transformed popular music. At the same time, many new American writers in the 1950s, including members of the Beat Generation, such as poet Allen Ginsberg and author Jack Kerouac, challenged the new consumerist conformity that pervaded American life.