The Rise and Fall of The American Economic Empire

1970-1980

So far, this decade saw the biggest hike in median home prices, going from $17,000 in 1970 to a jaw-dropping $47,200 in 1980. The average inflation rate also spiked from 5.8% to 13.5%.

The issue in the 70s? A muted economy compared to the rising inflation. President Gerald Ford best put it into words in 1975 when he said that “the economy is in a severe recession. Unemployment is too high and will rise higher.” at the start of the  “Economic Report of the President”.

Unsurprisingly, given that the worst time period was between 1973 and 1975. The effects of the Yom Kippur War and the Arab oil embargo were felt starting from 1973 as oil prices went from $2.90 a barrel to a shocking $11.65. This lasted until January of 1974.

But what’s worse, a second oil shock hit us in 1978 alongside the Iranian revolution. From April 1979 to April 1980, oil prices doubles. Interest rates also went up from 6.9% to 19% in 1981 due to an aggressive campaign by the Federal Reserve. While this decision helped the economy right then and there, it certainly did not make it easy on the following decade.