Stagflation: How bad were the '70's, anyway?

[moda0306]

Ive recently gotten very interested in the 1970's economy, because it tends to be the decade that makes me scratch my head the most on my economic assertions (MMR and all that).

One of the main terms that came out of the era was "stagflation,"... The idea that we were in an economy with little/no growth but high inflation.  I was curious what the real GDP growth really was in the 70's, looked it up, and was surprised to see pretty decent real economic growth. See the link and sound off fellas...

http://www.usgovernmentspending.com/us_real_gdp_history

[MediumTex]

The culture in the late 1970s was pretty downtrodden.  The country music, the high unemployment, the inflation, the high gas prices.  It all added up to a pretty crappy feeling.

It probably felt worse than it actually was.

I've always thought Merle Haggard's "If We Can Make It Through December" captured the mood of the 1970s pretty well.

[smurff]

Don't forget disco.

[MediumTex]

Don't forget disco.

Maybe Led Zeppelin and Pink Floyd make up for disco.

[notsheigetz]

I got married, had three kids, and bought two houses during the seventies. I remember hearing a lot of talk about how bad things were but they didn't seem to affect me very much. Probably didn't notice because I was just starting out and didn't have any investments to pay attention to.

I do remember things getting very bad near the end of the decade and into the early 80's when we came as close to hyperinflation as we have probably ever been in my lifetime. Back then, the Fed Chairman, Paul Volcker, was apparently convinced that raising interest rates was the way to cure things. When I moved to Florida in 1981 I could only afford to buy a mobile home because interest rates were so high. The rate on my mobile home was 19% and the cost to buy it was more than I paid for my house.

Then again, my parents who were just retiring were making out like bandits on CD's. With rates as high as 18% they doubled their nest egg in the course of a few years merely by staying in cash (which they continued to do the rest of their lives unfortunately).

[moda0306]

Even unemployment wasn't all that horrible in the '70's, if you compare it to "morning in America," where we didn't get down to 6% unemployment until 1987.  After the '50's and '60's economies, it's easy to see why people may have felt the '70's were a disaster, but we had pretty decent real growth and only moderately high unemployment.  

http://data.bls.gov/pdq/SurveyOutputServlet

I was born in '84, so I wasn't around and probably shouldn't judge based on some numbers.

[WildAboutHarry]

I graduated from high school in 1970, and didn't really have much to compare inflation/stagflation to.  I was in the military and then college through 1983, so I was somewhat "protected" from the effects of inflation.  I didn't buy any of those 14% treasury bonds either.

1970s fashions, though, were awful.

Here are many other examples of 1970s pain if you are interested.

I do recall my father buying soap, detergent, canned goods, etc. on the theory that prices could only go up and it was better to get them on the cheap.

[Reub]

I can remember the day-after-day outrage at the Iran that Jimmy Carter helped to create holding our people hostage and humiliating this country non-stop until Carter finally left office. We were disgraced, leaderless, our economy out of control. Because of Carter's decision to throw away our ally we are faced with an ever-burgeoning threat to this day, 34 years later.

And now, with the help of the great, all-knowing Obama, we've turned Egypt into the next Iran. And possibly Libya and Tunisia as well.

[stone]

Reub, is Egypt now anti-American?

[stone]

I was only a child at the time so I don't really know much about it. We did live in Texas for a year in 1979 and I can remember the country music fondly- Willy Nelson etc . I think that year was apparently a mess back in the UK. There was a very widespread strike with only enough electricity to enable people to work a three day week, rubbish left uncollected etc etc.

I guess the UK problem was that unions got total power over the economy but they didn't seem to grasp that that made it their economy and so their responsibility to run it effectively. Potentially almost all of the UK could have been turned over into being  employee owned and efficiently run for the employees' benefit (like John Lewis Partnership http://en.wikipedia.org/wiki/John_Lewis_Partnership ). Instead the Unions ran everything into the ground with pointless obstructiveness and waste.

[2thefuture]

I recall the 70's as a time of government tampering with the housing market. Johnson's great society started the department of HUD in the 60"s and by the 70's red lining, and FHA rates had home ownership out of reach of lower income folks.  The bailout of the Savings and Loans plus defaults in the 235 loan program which granted  government financing without downpayment and payments based on income paved the way for stagflation. Since government repeats itself, we now have the government bailout of Carter's 80's Reinvestment Act and Clinton's additions to it in the 90's with the subprime mess. From here I say stagflation is around the corner.

[MediumTex]

The U.S. humiliation in Vietnam and Nixon being forced to resign must have been a potent one-two punch making Americans feel less optimistic about things in general.

I don't know how many people noticed at the time, but Nixon ending gold convertibility also didn't help things much as the decade progressed.

[notsheigetz]

The U.S. humiliation in Vietnam and Nixon being forced to resign must have been a potent one-two punch making Americans feel less optimistic about things in general.

I don't know how many people noticed at the time, but Nixon ending gold convertibility also didn't help things much as the decade progressed.

The U.S. "humiliation" in Vietnam was just the icing on the cake following the tumultuous decade of the 60's. From the threat of nuclear annihilation during the Cuban missile crisis, the war in Vietnam with its massive protests never before seen in American History, the civil rights movement and accompany race riots - all of it played out on television before the eyes of a bewildered nation new to the medium - the feeling that the whole fabric of society was unraveling and the whole world was going to hell was very powerful as the decade of the 70's began.

Personally, I don't remember hearing a word about Nixon ending gold convertibility. I don't know that it would have meant anything to me if I did. We didn't have the internet to explain the significance of things from many points of view the way we do today.

[WildAboutHarry]

Personally, I don't remember hearing a word about Nixon ending gold convertibility. I don't know that it would have meant anything to me if I did. We didn't have the internet to explain the significance of things from many points of view the way we do today.

The EOTWAWKI novel Alas, Babylon, published in 1959, had a rather extensive section about how banks dealt with the fictional nuclear attack aftermath, and of course dealt with the economics of post-nuclear-war circumstances.  Gold was nowhere to be found in the novel.  Gold was simply not part of the everyday economy of that time.

[MachineGhost]

The culture in the late 1970s was pretty downtrodden.  The country music, the high unemployment, the inflation, the high gas prices.  It all added up to a pretty crappy feeling.

CB radios.  Parachute pants.  Motorcycle sideburns.  Bicycles with curved handlebars.  Disco.  Roller skating.  Lesiure suits.  Cocaine.  Astrology.  Cold War.

It was all very ... gay.  But it had a nice, unstressful vibe unlike today.

[gizmo_rat]

The 70 were great, I ruled the streets on my chopper bike with a polyester six million dollar man t shirt. We played out on the streets and back alleys in groups of 5 or more until late at night without fear or supervision. The only night to come in early was Saturdays to watch Wilma Deering in the 21 st century.

However for my parents the 70's were economically nasty. They were barely able to meet the mortgage month to month, inflation peaked at 25%, a series of strikes (because pay couldn’t keep up), power cuts and a IMF bail out. 
Nothing really worked properly; cars, fridges, washing machines, plumbing, TV's would all be in a constant state of expensive repair.

However there was no institutional debt beyond your mortgage. (Credit cards were for 'fur coat and no knickers' types.) There was a strong sense of community, people loaned money, food and looked after each other’s children. Local shop keepers did a kind of pay day loan thing (with no interest).

All things considered I think I’d  rather face stagflation with a 1970’s society than a 2010’s society.

[MediumTex]

It's also worth pointing out that the workplace in the 1970s was basically a free fire zone for sexual harassment with a lot of smoke drifting around since everyone smoked inside back then.

It also kind of sucked if you were black or gay.

[moda0306]

MT,

Re: being black or gay... did it suck any more so  than if it was the '50's or '60's?  Maybe those time periods had good enough economies to keep both racist and poor people happy enough...

[MediumTex]

MT,

Re: being black or gay... did it suck any more so  than if it was the '50's or '60's?  Maybe those time periods had good enough economies to keep both racist and poor people happy enough...

It probably sucked less in the 1970s than in earlier times, but things are a LOT better today, especially when it comes to career opportunities for women.

[Bob]

I graduated from high school in 1971; from college in 1976; and served in the US Army from 1976-1980.  I remember the day in 1971 when I saw a local Chevron station selling gas at 51.9 a gallon.  I thought, "My God, how are we ever going to be able to put gas in our cars?" I remember reading Time and Newsweek articles in 1973-1974 during the oil embargo that stated that we would be out of fossil fuels by the year 2000.  I also remember taking out a CD in 1979 and getting 14.1% interest on it.  My passbook savings account paid 6%.  If you had no debt and you had money in CDs, like my parents, you did quite well.  While there were constant news reports about how bad the economy was - and the lack of leadership by Jimmy Carter and the Iranian hostage crisis didn't help the national zeit geist - I still felt like I could do OK and have a fulfilling career, which I did.  That optimism is missing today. 

[Ad Orientem]

The culture in the late 1970s was pretty downtrodden.  The country music, the high unemployment, the inflation, the high gas prices.  It all added up to a pretty crappy feeling.

CB radios.  Parachute pants.  Motorcycle sideburns.  Bicycles with curved handlebars.  Disco.  Roller skating.  Lesiure suits.  Cocaine.  Astrology.  Cold War.

It was all very ... gay.  But it had a nice, unstressful vibe unlike today.

+ lava lamps, bell bottoms, platform shoes, super-wide ties and lapels and the coup de grâce... the plaid polyester leisure suit.

[Ad Orientem]

It's also worth pointing out that the workplace in the 1970s was basically a free fire zone for sexual harassment with a lot of smoke drifting around since everyone smoked inside back then.

It also kind of sucked if you were black or gay.

If you get a chance see if you can find a copy of the short lived ABC TV series "Life On Mars." It's an Americanized remake of a British series of the same name. The plot revolves around an NYPD detective from modern times who is truck by a car. When he wakes up he's still a cop but it's 1973 and he as to adjust to living in a world that is radically different from the one he is from. My sister who is a fan of all things 70's turned me onto the series. It was a dark but often hysterically funny lampoon of the decade. Think Barney Miller with attitude.

[MediumTex]

It's also worth pointing out that the workplace in the 1970s was basically a free fire zone for sexual harassment with a lot of smoke drifting around since everyone smoked inside back then.

It also kind of sucked if you were black or gay.

If you get a chance see if you can find a copy of the short lived ABC TV series "Life On Mars." It's an Americanized remake of a British series of the same name. The plot revolves around an NYPD detective from modern times who is truck by a car. When he wakes up he's still a cop but it's 1973 and he as to adjust to living in a world that is radically different from the one he is from. My sister who is a fan of all things 70's turned me onto the series. It was a dark but often hysterically funny lampoon of the decade. Think Barney Miller with attitude.

It's on Netflix.  I watched a few episodes.  Good show.

[WildAboutHarry]

If you get a chance see if you can find a copy of the short lived ABC TV series "Life On Mars." It's an Americanized remake of a British series of the same name. The plot revolves around an NYPD detective from modern times who is truck by a car. When he wakes up he's still a cop but it's 1973 and he as to adjust to living in a world that is radically different from the one he is from. My sister who is a fan of all things 70's turned me onto the series. It was a dark but often hysterically funny lampoon of the decade. Think Barney Miller with attitude.

If you can, I would recommend watching the British original.  Detective Chief Inspector Gene Hunt (Phillip Glenister) is magnificent.

[dualstow]

Worst thing about the 70s: the percolated coffee.

Don't forget disco.

Maybe Led Zeppelin and Pink Floyd make up for disco.

Maybe he's not the highest authority, but Bret (prounced BrIt) of New Zealand's 'Flight of the Conchords' was a guest DJ on satellite radio recently, and he commented that for him the 70s were the golden age of recording.

I actually like listening to disco and despite what most people inferred from a Talking Heads lyric, so does David Byrne!