Postwar inflation and shortages in the United States

Postwar inflation and shortages in the United States were a defining strain of the transition from wartime mobilization to civilian life. Even as employment remained high, money was plentiful, and business boomed, prices rose and essential goods stayed scarce. The contradiction placed pressure on households and made economic policy a source of political conflict for Harry S. Truman.

Postwar pressures

The problem was already visible in Truman’s first major postwar domestic program. In a 16,000-word message to Congress on September 6, 1945, he proposed a 21-point agenda that included extending the War Powers and Stabilization Act for a full year, so the government would retain control over business. He also called for federal housing aid intended to make a million new homes possible each year. These proposals reflected the scale of the shift he was trying to manage: the country needed to move from wartime direction toward peace without abandoning measures intended to stabilize the economy or meet urgent civilian needs.

The strain continued as labor unrest disrupted production. At the height of the national labor trouble, more than a million workers were on strike. The settlement of the steel strike brought higher wages but also an increase in steel prices, a result expected to fuel further inflation. Truman had offered steelworkers an 18½-cent hourly increase before his own fact-finding board had reported; the settlement helped establish that raise as the amount other workers would seek. The decision resolved one stoppage without easing the broader economic pressure.

Shortages amid apparent prosperity

By the approach of the 1946 election, the feared depression had not arrived. Employment was high, money was abundant, and business was thriving. Yet the cost of living had climbed 6½ points since the end of 1945, while acute shortages persisted in housing, automobiles, refrigerators, nylon stockings, sugar, and coffee. Meat was increasingly difficult to obtain as well. Prosperity in aggregate did not mean that families could readily buy the goods they wanted.

The labor conflict had consequences beyond wages and prices. When John L. Lewis withdrew his miners, coal shortages forced steel plants to bank their furnaces; Ford and Chrysler closed, freight loadings fell by 75 percent, and Chicago was ordered to cut electricity use by half. These disruptions showed how shortages in a basic industrial input could spread through manufacturing and transport. The earlier steel settlement, meanwhile, had linked wage increases to higher prices, leaving the administration exposed to demands for both better pay and cheaper goods.

Price controls and political consequences

Meat scarcity became a particularly visible election issue. Cattle raisers staged a strike and refused to send cattle to market, while Republicans made the shortage a campaign theme. Asked about meat on October 10, Truman replied that he had nothing to say on the subject. The remark captured the political awkwardness of a crisis that could not be answered simply by pointing to strong employment or a booming economy.

Democratic Party chairman Bob Hannegan warned Truman that keeping meat-price controls would risk a Republican sweep unless the controls were dropped. Truman saw a trap either way: ending controls would look like capitulation to pressure, while retaining them would leave him blamed for the continuing shortages and discontent. Inflation and scarcity thus became more than measures of economic strain. They narrowed the administration’s choices and gave voters a concrete test of whether postwar prosperity was reaching ordinary households.