US federal spending as a share of GDP

 Here is a conservative view of this epoch from the Mercatus Center/George Mason University

  (alternative comments would be most welcome)

In the four years from peak World War II spending in 1944 to 1948, the U.S. government cut spending by $72 billion—a 75-percent reduction. It brought federal spending down from a peak of 44 percent of gross national product (GNP) in 1944 to only 8.9 percent in 1948, a drop of over 35 percentage points of GNP.

While government spending fell like a stone, federal tax revenues fell only a little, from a peak of $44.4 billion in 1945 to $39.7 billion in 1947 and $41.4 billion in 1948. .. Yet, the economy boomed. The unemployment rate, which was artificially low at the end of the war because many millions of workers had been drafted into the U.S. armed services, did increase. But during the years from 1945 to 1948, it reached its peak at only 3.9 percent in 1946, and, for the months from September 1945 to December 1948, the average unemployment rate was only 3.5 percent.

The U.S. economy during the post-World War II years is exhibit A against the Keynesian view that economies will necessarily suffer high unemployment and slow growth when governments make big cuts in government spending…dramatically reducing government spending and deregulating an economy can take that economy from sickness to health…


Cost of Living 1948

Yearly Inflation U.S.A. 7.74%

Average Cost of new house $7,700.00

Average wages per year $2,950.00

Cost of a gallon of Gas 16 cents

Average Cost of a new car $1,250.00

Loaf of Bread 14 cents

LB of Hamburger Meat 45 cents

Science and Mechanics Magazine 20 cents

Movie Ticket 60 Cents

Cauliflower 15 cents per head

Chewing Gum 12 cents for 3

Coffee 85 cents for 2 pound bag

Onions 49 cents 10 pounds

Pork and Beans 25 cents for 2 cans

Pork Roast 39 Cents per pound