Vietnam War and the Economy

The Vietnam War had several effects on the U.S. economy. The requirements of the war effort strained the nation's production capacities, leading to imbalances in the industrial sector. Factories that would have been producing consumer goods were being used to make items from the military, causing controversy over the government's handling of economic policy. In addition, the government's military spending caused several problems for the American economy. The funds were going overseas, which contributed to an imbalance in the balance of payments and a weak dollar, since no corresponding funds were returning to the country. In addition, military expenditures, combined with domestic social spending, created budget deficits which fueled inflation. Anti-war sentiments and dissatisfaction with government further eroded consumer confidence. Interest rates rose, restricting the amount of capital available for businesses and consumers. Despite the success of many Kennedy and Johnson economic policies, the Vietnam War was a important factor in bringing down the American economy from the growth and affluence of the early 1960s to the economic crises of the 19