-
The Federal Reserve was established during Woodrow Wilson's Presidency. It soon undertook its mandate to promote economic stability throughout the United States. Its importance is highlighted by its longevity and recurring appearance in economic news. Several financial assets are valued in relation to target interest rates set by the Fed, and these decisions have both macro- and micro-economic effects. This all re-affirms the impact the Federal Reserve continues to have on the U.S. economy. -
July 28, 1914 marks the effective beginning of WWI. Then, the U.S. was in a recession and had not yet begun to recover. However, as European nations became increasingly ravaged by war, they looked elsewhere for resources. In response, the U.S. drastically ramped up its exports, which re-vitalized its economy. Although isolationist sentiment initially kept the U.S. from wholly mobilizing its economy, the exports to both sides acted as a favorable stimulant. Later entry furthered this recovery. -
On October 29, 1929, stock prices fell drastically - another harbinger of the Great Depression. Although the collapse did not cause the Depression, it was another sign that the U.S. economy was entering a severe downturn. The ensuing Depression lasted over a decade and the United States did not truly emerge from it until it entered World War II. In the interim, however, efforts to ameliorate
the situation (The New Deal) drastically altered the nature of America's economic and social landscape. -
In response to Black Tuesday, FDR passed two Securities Acts, the second of which mandated public companies to publish audited financial statements. This requirement boosted stock-market participation and continues to encourage such participation, as external audits provide a reasonable level of assurance about public companies' financial statements. Assured of the accuracy of financial disclosures, ordinary and institutional investors can be confident as they analyze potential investments. -
In response to the attack on Pearl Harbor, the U.S. entered WWII. The subsequent economic mobilization was crucial in stimulating American productivity and putting the nation on the path to recovery. Wartime demands created many job opportunities, and many entered the workforce to replace those who were deployed to fight on both fronts. The danger was that after the stimulus (war) ended, the entire economy would have to revert from a wartime production model while avoiding a major recession. -
The end of WWII required the U.S. to shift away from being a war economy. This presented the serious risk of a massive recession. To prevent this, U.S. businesses re-framed their activities in the language of patriotism and support of a new war against recession. This figurative mobilization ushered in a time of mass consumerism that effectively delayed a recession and arguably blunted its impact upon arrival. The economic boom also led to housing becoming the main source of Americans' wealth. -
In 1965, President LBJ began approving bills that would soon be collectively known as the Great Society program. These bills had long-lasting effects by rapidly and broadly expanding the welfare state. To this day, debates over welfare and the need for reform remain at the heart of politics. Today, it is clear that the Great Society fundamentally re-shaped the relationship between the U.S. government and its people while considerably influencing the economic and social decisions of Americans. -
In October 1973, the world's leading oil producers (OPEC) restricted oil exports to several Western countries. At that point, millions of businesses and ordinary Americans relied on oil - whether as energy for production or gas for cars. The resulting economic recession suggested to many that America needed to be more energy-independent. This became a recurring theme throughout politics for the next several decades and energy policy has shaped the development of U.S. businesses ever since. -
Ronald Reagan's election marked the beginning of a period of economic reform. Reagan introduced a concept (supply-side economics) that continues to dominate economic thought. To this day, politicians embrace Reagan's policy of unshackling businesses. Capitalizing on the wave of discontent of Carter-era stagflation, Reagan cut taxes and deregulated heavily. While such policies were embraced by future Republican and Democrat presidents, others were blamed for subsequent economic struggles. -
On March 10, 2000, the dot-com-driven NASDAQ peaked before falling drastically and remaining low for several years. This event demonstrated the danger of speculative bubbles within the U.S. economy, as many lost entire life savings. Though it cautioned against such investments in the future, it now serves as a model of what an economic bubble is. While this has improved the investment decisions of millions, many more continue to fall for such crazes (housing), suggesting future repeats. -
On September 15, 2008, Lehman Brothers bank shut its doors for a final time. This heralded the Great Recession - a downturn that should have demonstrated the danger of perverse governmental incentives (caused by its backing mortgages) but instead led to major reforms imposed on private banks. This was an important period in American economics because it saw fiscal hardship faced by millions of Americans and launched the U.S. on a decades-long trend of quantitative easing and low interest rates.