page_title: 1970s
section_title: Economy
hierarchical_section_title: 1970s / Economy
caption_attribution_description: English: Automobiles lining up for fuel at a service station in the U.S. state of Maryland in the United States, in June 1979.
context_page_description: The 1970s was a decade of the Gregorian calendar that began on January 1, 1970, and ended on December 31, 1979.
  In the 21st century, historians have increasingly portrayed the 1970s as a "pivot of change" in world history, focusing especially on the economic upheavals that followed the end of the postwar economic boom. In the Western world, social progressive values that began in the 1960s, such as increasing political awareness and economic liberty of women, continued to grow. In the United Kingdom, the 1979 election resulted in the victory of its Conservative leader Margaret Thatcher, the first female British Prime Minister. Industrialized countries, except Japan, experienced an economic recession due to an oil crisis caused by oil embargoes by the Organization of Arab Petroleum Exporting Countries. The crisis saw the first instance of stagflation which began a political and economic trend of the replacement of Keynesian economic theory with neoliberal economic theory, with the first neoliberal governments being created in Chile, where a military coup led by Augusto Pinochet took place in 1973.
context_section_description: The 1970s were perhaps the worst decade of most industrialized countries' economic performance since the Great Depression. Although there was no severe economic depression as witnessed in the 1930s, economic growth rates were considerably lower than previous decades. As a result, the 1970s adversely distinguished itself from the prosperous postwar period between 1945 and 1973. The oil shocks of 1973 and 1979 added to the existing ailments and conjured high inflation throughout much of the world for the rest of the decade. U.S. manufacturing industries began to decline as a result, with the United States running its last trade surplus (as of 2009) in 1975. In contrast, Japan and West Germany experienced economic booms and started overtaking the U.S. as the world's leading manufacturers. In 1970, Japan overtook West Germany to become the world's second-largest economy. Japan would rank as the world's second-largest economy until 1994 when the European Economic Area (18 countries under a single market) came into effect.
  In the US, the average annual inflation rate from 1900 to 1970 was approximately 2.5%. From 1970–1979, however, the average rate was 7.06%, and topped out at 13.29% in December 1979. This period is also known for "stagflation", a phenomenon in which inflation and unemployment steadily increased. It led to double-digit interest rates that rose to unprecedented levels (above 12% per year). The prime rate hit 21.5 in December 1980, the highest in history. A rising cost of housing was reflected in the  average price of a new home in the U.S. The average price of a new home in the U.S. was $23,450 in 1970 up to $68,700 by 1980. By the time of 1980, when U.S. President Jimmy Carter was running for re-election against Ronald Reagan, the misery index (the sum of the unemployment rate and the inflation rate) had reached an all-time high of 21.98%. The economic problems of the 1970s would result in a sluggish cynicism replacing the optimistic attitudes of the 1950s and 1960s and a distrust of government and technology. Faith in government was at an all-time low in the aftermath of Vietnam and Watergate, as exemplified by the low voter turnout in the 1976 United States presidential election.
  There was also the 1973–74 stock market crash.
  Great Britain also experienced considerable economic turmoil during the decade as outdated industries proved unable to compete with Japanese and German wares. Labor strikes happened with such frequency as to almost paralyze the country's infrastructure. Following the Winter of Discontent, Margaret Thatcher was elected prime minister in 1979 with the purpose of implementing extreme economic reforms.
  In Eastern Europe, Soviet-style command economies began showing signs of stagnation, in which successes were persistently dogged by setbacks. The oil shock increased East European, particularly Soviet, exports, but a growing inability to increase agricultural output caused growing concern to the governments of the COMECON block, and a growing dependence on food imported from democratic nations.
  On the other hand, export-driven economic development in Asia, especially by the Four Asian Tigers (Hong Kong, South Korea, Singapore, and Taiwan), resulted in rapid economic transformation and industrialization. Their abundance of cheap labor, combined with educational and other policy reforms, set the foundation for development in the region during the 1970s and beyond.
caption: Line at a gas station in Maryland, June 15, 1979.
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