Stagflation and the oil crisis
- In the early 1970s, the post-World War II economic boom began to wane, due to increased international competition, the expense of the Vietnam War, and the decline of manufacturing jobs.
- Unemployment rates rose, while a combination of price increases and wage stagnation led to a period of economic doldrums known as stagflation. President Nixon tried to alleviate these problems by devaluing the dollar and declaring wage- and price-freezes.
- The crisis was compounded when oil-rich nations in the Middle East declared an embargo against the United States in retaliation for its support of Israel. The oil embargo had a lasting effect on energy prices.