8.4 Economy after 1945

• Pent-up demand: Americans had saved during the war, when rationing limited what they could buy, and now wanted houses, cars and appliances.
• The GI Bill (Servicemen's Readjustment Act, 1944): paid college tuition and job training for millions of veterans and backed low-interest home and business loans. It helped create a more educated workforce and made home ownership possible for millions of families.
• Defense spending: the Cold War kept military spending high, supporting aerospace, electronics and research industries.
• Baby boom: births soared from 1946 to 1964, increasing demand for homes, schools and consumer goods.
• Global position: with rivals' economies recovering from war damage, American industry dominated world markets.

Unions were strong. Union membership reached about a third of nonfarm workers in the mid-1950s, and contracts like the 1950 agreement between the United Auto Workers and General Motors traded labor peace for rising wages, pensions and health benefits. But a wave of strikes in 1946 led a Republican Congress to pass the Taft–Hartley Act (1947) over Truman's veto. It banned the closed shop (requiring union membership to be hired) and let states pass 'right-to-work' laws.

The Employment Act of 1946 made maximum employment a federal goal. Truman's 'Fair Deal' proposals for national health insurance failed in Congress, but Social Security expanded. Eisenhower, a Republican, accepted most New Deal programs, a sign of a broad postwar consensus.

Builder William Levitt used assembly-line methods to build thousands of identical, affordable houses at Levittown on Long Island, New York, starting in 1947. Similar developments spread nationwide. Federal Housing Administration and VA loans made it cheaper to buy a suburban house than to rent in the city.

The Interstate Highway Act (Federal-Aid Highway Act of 1956), backed by Eisenhower partly for national defense, funded about 41,000 miles of highways. Highways made commuting by car easy, encouraged trucking, and boosted suburbs, shopping malls and motels.

Many Americans also moved to the Sun Belt, the South and Southwest, drawn by defense plants, military bases, jobs, warm weather and air conditioning. California, Texas, Florida and Arizona grew rapidly.

Housing discrimination shaped the suburbs. Redlining, the practice of rating Black and mixed neighborhoods as risky and denying them loans, began with federal maps in the 1930s and continued in FHA lending rules. Levittown's early contracts barred Black buyers. The Supreme Court ruled in Shelley v. Kraemer (1948) that courts could not enforce racially restrictive covenants, but private discrimination continued.

As white families left for suburbs ('white flight'), cities lost tax money and jobs. Highways and 'urban renewal' projects often bulldozed Black and Latino neighborhoods. Rural Appalachia and many Native reservations remained poor. By 1960 about a fifth of Americans still lived in poverty.