The 1970s Business and the Economy: Overview

During the 1970s, business conditions and the economy were the worst they had been in decades. International events, the most important being the oil crises of 1973–74 and 1979, rocked a decade earmarked by rampant wage and price inflation and slow business growth. The unprecedented combination of these negative economic factors led to a new term: "stagflation." It also humbled the large institutions in the United States—the government, big business, labor unions—by demonstrating their reduced ability to affect the economy.

The increasing inflation during the 1970s was brought about in large part because of the government's funding of the Vietnam War and President Lyndon B. Johnson's "Great Society" social welfare programs. President Richard M. Nixon's initial unwillingness to curb the Johnson administration's government spending worsened the situation. As inflation rose, Nixon eventually responded with government-mandated wage-and-price controls, but they were only temporary measures. His presidential successors during that decade, Gerald R. Ford and Jimmy Carter, fared no better in their efforts to keep prices down.

Big businesses in America, particularly the automobile manufacturers, suffered terribly in such a poor economy. General Motors, Ford, and Chrysler were at the mercy of uncontrollable changes in the oil market and consumer preferences. As energy shortages arose in the decade, consumers demanded energy-efficient products, especially cars. Slow to see the need for such products, American carmakers lost ground to their European and Japanese competitors, who were able to satisfy consumer demand more quickly. In order to avoid bankruptcy in late 1979, Chrysler had to be propped up by government loan guarantees. During the decade, other American companies and even New York City also had to be helped by huge federal loans.

In such a depressed economy, it was remarkable that women and minorities continued to make gains in workplace equality. Those gains did not occur because of a change in business attitude toward the workers' abilities, but because of legislation and judicial action. Lawmakers and the courts forced businesses to alter their hiring practices so that everyone could have an equal chance at a successful career. Although by the end of the decade more women were employed than ever before, they continued to earn less money than their male peers earned for the same work. Equality in the workplace was still decades away.

Lost in the turmoil of the 1970s was the fact that the U.S. economy was going through a painful, yet necessary, transformation. Small companies forming at that time would, in the years to come, radically change the U.S. and world economy. Among these were Apple, Microsoft, and Nike. They set the stage for a new type of economy in the future, one that was less dependent on the large manufacturing companies that had dominated America for a large portion of the twentieth century.