Recession of 1958

The Recession of 1958 was a sharp worldwide economic downturn in 1958.

It hit economically disadvantaged countries hardest, because it involved a decline in the purchases of raw materials, both agricultural and mineral, by developed nations. The terms of trade of the underdeveloped countries was adversely affected. In Europe no less than in the United States there was a fairly sharp decline in investment in fixed capital. In the United States, unemployment rose but there was little or no decline in personal income. Auto sales fell 31% over 1957, making 1958 the worst auto year since World War II. Unemployment in Detroit stood at a high of 20% by April. Imports into the United States from Europe stayed high, but the recession in Europe reduced European purchases of American raw materials. And so the balance-of-payments deficit in the United States sharply increased. In Europe, however, a surplus in their balance of payments developed.

Normally prices fall during recessions but this time they went up, apart from raw materials. In the U.S. consumer prices rose 2.7% from 1957 to 1958, and after a pause they continued to push up until November, 1959. Wholesale prices rose 1.6% from 1957 to 1959. The continued upward creep of prices became a cause of concern among economists.

Politically in the U.S. the Democratic party made major gains in the off-year elections. See United States House election, 1958

References

* Alvin H. Hansen; "Economic Issues of the 1960s" 1960.
* George Katona; "The Powerful Consumer: Psychological Studies of the American Economy" 1960