Wartime economy and post-war affluence
America Goes to War: The Wartime Economy
When Japan attacked Pearl Harbor on 7 December 1941, the USA entered the Second World War. The effect on the American economy was transformational. Factories that had made cars switched to producing tanks and aircraft. By 1944, the USA was manufacturing more war material than all the Axis powers combined. Unemployment — still around 14 per cent in 1940 — effectively disappeared as millions entered the armed forces and the defence industries absorbed the rest.
The Second World War ended the Great Depression more decisively than the New Deal had. By 1944, unemployment had fallen to below 2 per cent as 12 million Americans served in the armed forces and defence production boomed. GDP roughly doubled between 1939 and 1945.
Women and Minorities in the Wartime Workforce
With men away at war, women entered the workforce in unprecedented numbers. The image of Rosie the Riveter became a symbol of women’s wartime contribution. By 1944 around 19 million women held jobs, including in heavy industry. African American workers also moved north and west in large numbers — the so-called Great Migration accelerated — taking factory jobs in Detroit, Chicago and Los Angeles. Executive Order 8802 (1941), issued by President Roosevelt, banned racial discrimination in defence industries, though enforcement was uneven.
The GI Bill (1944), formally the Servicemen’s Readjustment Act, reshaped post-war America. It gave returning veterans access to low-cost mortgages, funding for college education, and small business loans. Around 8 million veterans used the education benefits, swelling university enrolments and creating a better-educated workforce. Cheap mortgages enabled millions of families to buy homes — fuelling the suburban expansion of the late 1940s and 1950s.
However, the GI Bill’s benefits were distributed unequally. African American veterans faced discrimination from banks that refused mortgages and from universities that denied admission. The bill inadvertently reinforced racial segregation in housing by making all-white suburbs accessible to white veterans while largely excluding Black Americans.
The Suburban Dream: Levittown and the 1950s Boom
Post-war prosperity transformed where and how Americans lived. Developer William Levitt mass-produced entire communities of affordable homes. Levittown (New York, from 1947) offered identical houses at prices veterans could afford with GI Bill mortgages. The car made commuting practical, and by the mid-1950s millions of families had left cities for the suburbs. Between 1950 and 1960, suburban populations grew by over 40 per cent.
The 1950s saw the rise of a consumer society: television ownership rose from around 9 per cent of homes in 1950 to nearly 90 per cent by 1960. Car ownership, refrigerators, washing machines and drive-in cinemas defined the decade. GDP grew strongly and real wages rose, giving many Americans a standard of living unprecedented in history.
Consumer Society and its Contradictions
The 1950s economy was powered by mass consumption. Advertisers used television to create demand for new products. Credit became widely available, and the concept of “keeping up with the Joneses” — matching neighbours’ material possessions — became a cultural force. The economy grew rapidly, and by the late 1950s the USA produced roughly half the world’s manufactured goods.
The interstate highway system, authorised by President Eisenhower in the Federal Aid Highway Act of 1956, was the largest public works project in American history. Over 41,000 miles of motorway were planned, linking every major city and transforming the movement of goods, people and military equipment. The highways deepened car dependency, gave a further boost to the automobile industry, and accelerated the shift of retail and employment from city centres to suburban sites. Shopping centres and drive-through restaurants became defining features of American culture during this decade.
Beneath the prosperity, deep inequalities persisted. In 1962, journalist and activist Michael Harrington published The Other America, arguing that between 40 and 50 million Americans — roughly a quarter of the population — lived in poverty invisible to the suburban mainstream. These were the rural poor of Appalachia, elderly Americans on fixed incomes, African Americans excluded from the post-war boom, and urban workers left behind by economic change.
The phrase “poverty amidst plenty” captured the paradox: the world’s wealthiest nation contained millions who could not afford adequate food, housing or healthcare. Harrington’s book influenced President Kennedy and contributed directly to President Johnson’s “War on Poverty” in the mid-1960s, which created Medicare, Medicaid and federal education funding through the Great Society programme.