The Guns and Butter Recession (dec 1, 1969 – nov 1, 1970)
Description:
Duration: 11 monthsGDP decline: 0.6%
Peak unemployment rate: 5.9%
Reasons and causes:
Military spending increased in the late 1960s amid growing U.S. involvement in the Vietnam War and alongside high expenditures on domestic policy initiatives.27 As a result, the federal budget deficit rose from 1.1% of GDP in 1967 to 2.9% in 1968, while inflation increased from 3.1% in 1967 to 4.3% a year later and 5.3% by 1970. The Federal Reserve increased the federal funds rate from 5% in March 1968 to more than 9% by August 1969. By early 1971, the Fed had lowered the federal funds rate back below 4%, aiding the recovery.26
Added to timeline:
Date:
dec 1, 1969
nov 1, 1970
~ 11 months