The American Economy of the 1920s

The American Economy of the 1920s

• The 1920s saw a significant economic boom in the US, characterized by low unemployment and inflation rates, and substantial GDP growth per capita. This era became known as the Roaring Twenties due to wealth improvements and rising consumerism.
• Wealth disparity widened during this period, yet many in the middle class experienced improvements in living standards due to technological advancements and increased efficiency in manufacturing.
• Consumerism was fueled by a rise in the availability of goods and easier access to credit. This, along with other macroeconomic factors, ultimately led to the 1929 stock market crash.
• The 1920s were not just an economic phenomenon, but a complex cultural and economic phenomenon with developments in literature, art, culture, and consumerism.

Causes of the Roaring Twenties

• The war's end in 1918 and resultant technological advancements significantly impacted consumer culture.
• War innovations were rapidly adopted into civilian life, fueling the consumerist culture of the 1920s.

Characteristics of American Companies in the 1920s

• Companies reacted to consumerism by developing new products and manufacturing methods.
• Henry Ford's innovations in automobile manufacturing led to a rise in car ownership.
• American companies expanded into global markets, and foreign companies sought access to the US's strong economy.
• Advertising evolved significantly thanks to radio, encouraging consumerism through targeted campaigns.

The Rise of Consumerism in the 1920s

• Mass-produced goods were more widely available at lower prices.
• High wages and credit facilities further encouraged consumer spending.
• New products like radios, cars, and appliances transformed daily life for most Americans.
• However, consumerism and overspending also created a potential for problematic debt accumulation and unnecessary purchases.

Buying on Credit in the 1920s

• Installment plans allowed consumers to buy goods over time, fueling significant consumer spending.
• Consumer debt more than doubled between 1920 and 1930.
• A major factor contributing to the 1929 crash, this increase in debt was significantly problematic.

Pop Culture in the 1920s

• Pop culture became much more liberal and free-spirited than in previous decades.
• The Jazz Age saw the rise of jazz music, a new youth culture, and classic Hollywood films.
• Flappers, independent women defying traditional norms, became cultural icons showcasing a rising spirit of women's liberation through their lifestyle choices.

Coolidge Prosperity in the 1920s

• President Calvin Coolidge oversaw a period of economic prosperity characterized by a hands-off regulatory approach to businesses and tax cuts.
• His policies were popular during the time but were later criticized for ignoring wealth inequality and contributing to the 1929 stock market crash.

The Stock Market in the 1920s

• The stock market experienced rapid, unsustainable growth fueled by consumer spending and corporate profits.
• Market speculation and excessive leverage led to an overvalued market that could not sustain its growth.
• Personal investors increased considerably during this period.

1929 Stock Market Crash

• The October 1929 crash was a multi-faceted event caused by overinflated stock prices, consumer debt, international agricultural problems, rising interest rates, and panic.
• 'Black Thursday', 'Black Monday', and 'Black Tuesday' marked the beginning of the major crash.
• This crash triggered the Great Depression, devastating American society throughout the 1930s.