After World War II the efficiency and productivity of the US economy improved markedly. From 1945 to 1975 output per hour of labor increased 120 percent while output per standard unit of energy increased 23 percent.
Work hours in agriculture fell from 19.2 to 7.5 percent also during this time.
As the 1960 presidential election campaign got under way, the 1960-1961 recession began. John F Kennedy’s 1960 campaign promise “ to get America moving again “ referred to the American economy. He wanted economic growth at an annual rate of 4-6 percent and unemployment at 4 percent.
Kennedy knew that the economy was in big trouble so he sent congress an economic growth and recovery package consisting of twelve measures. They were an increase in the minimum wage from $1.00 to $1.25 per hour and an extension of the minimum wage to a larger pool of workers, an increase in unemployment compensation plus increased aid to children of unemployed workers, increase social security benefits to a larger pool of people, emergency relief for feed grain farmers, area redevelopment, vocational training for displaced workers, and federal funding for home building and slum eradication.
By mid 1962 he was convinced the economy needed additional stimulation that could be provided through a tax cut. Kennedy suggesting that business needed the tax relief that would be provided by liberalizing the depreciation allowance on new plants and equipment and by giving business a 7 percent investment tax credit.
In early 1963 inflation was stable, corporate profits were at a record high, and the stock market had rebounded, but unemployment was still too high at 5.7 percent.
President Johnson inherited a strong economy from president Kennedy. The growth during his presidency between 1964 and 1965 gave him an annual dividend of $4-5 billion in extra revenues to spend. For the first two years of Johnson’s presidency the inflation rate was just under 2 percent. In 1965 inflation began to pick up slightly, but the GNP (gross national product) grew by $9 billion and unemployment stood at 1.4 percent.
The economy was looking better during the winter of 1966: real growth was 9 percent, and with unemployment at 3.8 percent the economy was robust. As it reached 1967 Johnson administration became concerned with inflation. On August 3 Johnson asked congress to impose a temporary 10 percent income tax surcharge. The surcharge became a law on June 28 1968 that was tied to a $6 billion budget reduction.
In 1968, Johnson’s almost last month in office, the growth rate was 4 percent and the unemployment rate was only 3.3 percent,
but the inflation rate had reached 4.7 percent.