Module 1: The Crisis

The Crisis

The Crisis of the 1970s marked a tumultuous period in American history, characterized by a series of interconnected economic, geopolitical, and social challenges. One of the most significant triggers was the dramatic rise in gas prices, which was driven by actions from the Organization of Petroleum Exporting Countries (OPEC). In response to U.S. support for Israel during the Six Days War (1967) and the Yom Kippur War (1973), OPEC nations imposed an oil embargo on the West, causing a sharp spike in global oil prices. This led to widespread fuel shortages, long lines at gas stations, and a sense of economic insecurity that was unprecedented for many Americans. The price of gasoline doubled, which had a ripple effect on the economy, raising transportation and manufacturing costs and leading to higher prices for consumer goods across the board.

As gas prices surged, the U.S. economy was also hit by inflation and stagflation—a dangerous combination of rising prices and stagnating economic growth. Stagflation was particularly troubling because it defied traditional economic logic, as inflation usually accompanies economic expansion, not a slowing economy. In the 1970s, however, high unemployment and sluggish economic growth were paired with escalating prices for everything from food to housing. The middle class, particularly in the growing suburbs, began to feel the strain. The rising cost of living was compounded by the increasing price of automobiles, a key symbol of suburban life. Many families, who had previously enjoyed the prosperity of the post-war boom, now struggled to maintain their standard of living, as wages failed to keep up with the rising cost of essential goods.

The economic instability of the 1970s also led to political upheaval, as Americans looked for solutions to the crisis. The lack of confidence in the government’s ability to address the gas crisis and control inflation contributed to a broader sense of frustration, leading to the election of Ronald Reagan in 1980, who promised to address these issues with a different economic approach. However, the long-term effects of the 1970s crisis lingered throughout the decade, reshaping American society. The suburbs, once a symbol of prosperity and stability, faced increasing challenges as the economic conditions of the 1970s undermined the sense of security many had once taken for granted. The oil shocks, combined with rising inflation and job insecurity, altered the American way of life and marked the end of the post-war economic boom.