Editing Economy of the United States (section)

===20th century===
[[File:NIE 1905 Petroleum - oil wells at Los Angeles.jpg|thumb|[[History of oil in California through 1930|Oil wells]] in [[Los Angeles]], 1905]]
[[File:B-24 Liberator Consolidated-Vultee Plant, Fort Worth Texas.jpg|thumb|[[Consolidated B-24 Liberator]]s at the Consolidated-Vultee Plant in [[Fort Worth, Texas]], 1943]]
[[File:New McDonald's restaurant in Mount Pleasant, Iowa.jpg|thumb|[[McDonald's]] restaurant in [[Mount Pleasant, Iowa]], 2008]]
At the beginning of the century, new [[innovation]]s and improvements in existing innovations opened the door for improvements in the standard of living among American consumers. Many firms grew large by taking advantage of economies of scale and better communication to run nationwide operations. Concentration in these industries raised fears of monopolies that would drive prices higher and output lower, but many of these firms were cutting costs so fast that trends were towards lower prices and more output in these industries. Many workers shared the success of these large firms, which typically offered the highest wages in the world.<ref>{{cite book|author=Baten, Jörg |title=A History of the Global Economy. From 1500 to the Present|date=2016|publisher=Cambridge University Press|page=95|isbn=978-1107507180|url=https://books.google.com/books?id=xYEGswEACAAJ}}</ref>

The United States has been the world's largest national economy in terms of GDP since around 1890.<ref>{{cite web | url=https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&psid=3158 | title=Digital History }}</ref> For many years following the [[Great Depression]] of the 1930s, when the danger of [[recession]] appeared most serious, the government strengthened the economy by spending heavily itself or cutting taxes so that consumers would spend more and by fostering rapid growth in the money supply, which also encouraged more spending. Ideas about the best tools for stabilizing the economy changed substantially between the 1930s and the 1980s. From the [[New Deal]] era that began in 1933 to the [[Great Society]] initiatives of the 1960s, national policymakers relied principally on [[fiscal policy]] to influence the economy.<ref>{{cite book | url=https://open.lib.umn.edu/macroeconomics/chapter/17-1-the-great-depression-and-keynesian-economics/ | title=17.1 the Great Depression and Keynesian Economics | date=December 2016 | publisher=University of Minnesota Libraries Publishing edition, 2016. This edition adapted from a work originally produced in 2011 by a publisher who has requested that it not receive attribution. | archive-date=July 26, 2023 | access-date=August 30, 2022 | archive-url=https://web.archive.org/web/20230726224459/https://open.lib.umn.edu/macroeconomics/chapter/17-1-the-great-depression-and-keynesian-economics/ | url-status=dead }}</ref>

During the world wars of the twentieth century, the United States fared better than the rest of the combatants because none of the First World War and relatively little of the Second World War were fought on American territory (and none on the then-48 states). Yet, even in the United States, the wars meant sacrifice. During the peak of Second World War activity, nearly 40 percent of U.S. GDP was devoted to war production. Decisions about large swaths of the economy were largely made for military purposes, and nearly all relevant inputs were allocated to the war effort. Many goods were rationed, prices and wages controlled, and many durable consumer goods were no longer produced. Large segments of the workforce were inducted into the military and paid half their wages; roughly half of those were sent into harm's way.<ref>{{cite book|author=Baten, Jörg |title=A History of the Global Economy. From 1500 to the Present|date=2016|publisher=Cambridge University Press|page=97f|isbn=978-1107507180|url=https://books.google.com/books?id=xYEGswEACAAJ}}</ref>

The approach, advanced by British economist [[John Maynard Keynes]], gave elected officials a leading role in directing the economy since spending and taxes are controlled by the [[President of the United States|U.S. president]] and [[Congress of the United States|Congress]]. The [[Post–World War II baby boom|"Baby Boom"]] saw a dramatic increase in fertility in the period 1942–1957; it was caused by delayed marriages and childbearing during the depression years, a surge in prosperity, a demand for suburban single-family homes (as opposed to inner city apartments), and new optimism about the future. The boom peaked around 1957 and then began to fade.<ref name="Susan Kellogg 1988">Steven Mintz and Susan Kellogg, ''Domestic Revolutions: a Social History of American Family Life'' (1988) ch 9</ref> A period of high inflation, interest rates, and unemployment after 1973 weakened confidence in fiscal policy as a tool for regulating the overall pace of economic activity.<ref name=buchanan1977>{{cite book |last=Buchanan |first=James M. |title=Democracy in Deficit: The Political Legacy of Lord Keynes |year=1977 |publisher=Academic Press |location=New York |isbn=978-0865972278 |pages=1–55|url=https://books.google.com/books?id=6RgARQAACAAJ}}</ref>

The U.S. economy grew by an [[Annual average GDP growth|average]] of 3.8% from 1946 to 1973, while real [[median household income]] surged by 74% (or 2.1% a year).<ref name=hhes>{{cite web|url=http://www2.census.gov/prod2/popscan/p60-162.pdf|title=Current Population Reports: Money Income of Households and Persons in the United States (1987)|publisher=U.S. Department of Commerce}}</ref><ref>{{cite web|url=http://www2.census.gov/prod2/popscan/p60-001.pdf|title=Current Population Reports: Income of nonfarm families and individuals (1946)|publisher=U.S. Department of Commerce}}</ref>

Since the 1970s, several [[emerging countries]] have begun to close the economic gap with the United States. In most cases, this has been due to moving the manufacture of goods formerly made in the U.S. to countries where they could be made for sufficiently less money to cover the cost of shipping plus a higher profit. In other cases, some countries have gradually learned to produce the same products and services that previously only the U.S. and a few other countries could produce. Real income growth in the U.S. has slowed. In the 1970s and 1980s, it was popular in the U.S. to believe that [[Economy of Japan|Japan's economy]] would surpass that of the U.S., but this did not occur.<ref>{{cite web |url=https://business.time.com/2011/02/14/is-china-facing-a-japanese-future/ |title=Is China facing a Japanese future?|magazine=Time |access-date=February 27, 2012|date=February 14, 2011|last1=Schuman|first1=Michael}}</ref>