View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

FEDERAL RESERVE BANK OF ST. LOUIS

ECONOMIC EDUCATION

Money for Nothing:
Economic Affluence in Postwar America
Lesson Authors
	
	

Mike Kaiman, Social Studies Teacher, Timberland High School, Wentzville, Missouri
Mark Bayles, Senior Economic Education Specialist, Federal Reserve Bank of St. Louis

Advance Placement® (AP) U.S. History Curriculum Alignment (see page 30)
Standards and Benchmarks (see pages 31)
Lesson Description
	

History students are familiar with the concept of post-World War II economic affluence. This
lesson allows students to dig deeper into elements of the postwar economic boom through
the mid-1960s to see that a growing economy occurs at all levels and affects people in different ways. First, students familiarize themselves with basic economic concepts such as gross
domestic product (GDP) as measured by an index and per capita. Next, using FRED® (Federal
Reserve Economic Data), students analyze and create their own arguments as to which economic forces contributed most directly to the overall growing economy. Finally, students evaluate the historical interpretations of the impact of postwar economic affluence on the United
States by responding to two secondary source descriptions of the era.

Grade Level
	10-12

Economic Concepts
	
Disposable income
	Index
	
Mean family income
	Nominal
	
Per capita
	
Personal consumption expenditures (PCE)
	Real
	
Real gross domestic product (GDP)
	
Standard of living

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

1

	

Money for Nothing: Economic Affluence in Postwar America

Objectives
	

Students will
•	

describe how GDP and per capita disposable personal income measure the state of the
economy,

•	

use FRED® to analyze and manipulate primary economic data to develop a historical
argument,

•	

examine and evaluate the validity of secondary source historical interpretations, and

•	

increase their data literacy.

Time Required
	

Approximately two 50-minute class periods

Materials
•	

Online access for the class to build FRED® graphs and view the FRED® Public Data List at
https://research.stlouisfed.org/pdl/966

•	

Visual 1: Economics Terms

•	

Visual 2: Graph Examples

•	

Handout 1: Money for Nothing: Economic Affluence in Postwar America, one copy for
each student

•	

Handout 1: Money for Nothing: Economic Affluence in Postwar America—Answer Key

•	

Handout 2: Excerpts, one copy for each student

Procedure
FRED® Graph Challenge: GDP
1.	

Explain to the students that the purpose of this activity is to try and understand how the rise
of middle-class economic affluence after World War II through the mid-1960s had a profound
impact on the state of the national economy. Individually they will conduct research using
economic data to evaluate which factors helped expand the American economy the most in
the postwar world.

2.	

Distribute a copy of Handout 1: Money for Nothing: Economic Affluence in Postwar America
to each student.

	

Instruct the students to open the data list noted in #1 on Handout 1.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

2

	

Money for Nothing: Economic Affluence in Postwar America

3.	

Once the students have opened the link, tell them that the list is of various economic data
series that include data for 1947 to 1965. (NOTE: The data list may be copied to your own,
free, FRED® account for future easy reference by clicking the “Save as My Data List” link under
the main title, logging in, and then clicking the “Actions” button and selecting “Copy.”)

	

Demonstrate for the students the two options for modifying the date range (as explained in
#2 of Handout 1).

	

Instruct the students to complete #2 and #3 on Handout 1. (The graph created should look
like the GDP [gross domestic product] graph below.) Allow time for students to work and
then review the answers using Handout 1: Answer Key.

GDP
NOTE: Shaded areas indicate recessions as determined by the NBER.
SOURCE: U.S. Bureau of Economic Analysis. Retrieved from FRED®, Federal Reserve Bank of St. Louis.

4.	

Explain that an index is a tool economists use to show overall growth changes. Numbers in
an index are expressed in terms of a base year value of 100; for example, a value of 105 means
the variable measured by the index has risen by 5 percent compared with the base year. So, if
an index grows to 200 over a given period, what is measured has doubled.

	

Instruct the students to complete #4 and #5 on Handout 1. Allow time for students to work
and then review the answers using Handout 1: Answer Key.

5.	

Explain that the data on the GDP graph they created are measured in nominal dollars, which
means that the dollar amounts are measured in current prices. This measurement does not
account for inflation, which will skew the overall value of a dollar over time. There are other
GDP graphs in FRED® that measure GDP in real dollars, which means that the data do account
for inflation. It is important to know the difference between nominal and real. Later in this
lesson they will look at other graphs that may use either measure.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

3

	

Money for Nothing: Economic Affluence in Postwar America

FRED® Graph Challenge: Per Capita Real Disposable Personal Income and Changes in the
U.S. Standard of Living
6.	Display Visual 1: Economics Terms.
	

Instruct the students to complete #6 on Handout 1. Allow time for students to work and then
review the answers using Handout 1: Answer Key.

7.	

Tell the students they will now search for and manipulate a FRED® data series to create a new
graph that shows per capita disposable personal income in an effort to better show the
standard of living for American families.

	

Instruct the students to complete #7 on Handout 1. Allow time for students to work and then
discuss the following:

8.	

	

•	

What are the units of the graph you just created? (Billions of chained 2009 dollars)

•	

How does this graph differ from the previous graph? (It shows real dollars instead of
nominal dollars, so it measures actual growth by adjusting for inflation.)

Tell the class that they will now manipulate the FRED® graph to
•	

add the total U.S. population to the graph and

•	

edit the graph to calculate U.S. per capita disposable personal income after World War II.

Instruct the students to complete #8 to #14 on Handout 1. (The graph created should look
like the Per Capita Real Disposable Personal Income graph below.) Allow time for students to
work and then review the answers using Handout 1: Answer Key.

Per Capita Real Disposable Personal Income
NOTE: Shaded areas indicate recessions as determined by the NBER.
SOURCE: U.S. Bureau of Economic Analysis and U.S. Bureau of the Census. Retrieved from FRED®,
Federal Reserve Bank of St. Louis.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

4

	

Money for Nothing: Economic Affluence in Postwar America

FRED® Public Data Series Analysis
9.	

Tell the students they will now return to the data list viewed at the beginning of the lesson.

	

First review the directions in #15 of Handout 1. Remind the students that when they are filling
in the table they should describe the data presented in their own words. For example, the
dataset “Mean Family Income in the United States” measures the combined income (wages,
salaries, retirement benefits, food stamps, etc.) of all people living in a single household. For
answering the correlation/causation column, strongly suggest that they add GDP to each graph
to visualize the relationship in a clearer manner.

	

Instruct the students to complete the chart, “FRED® Public Data Series Analysis” (on the last
page of Handout 1). Allow students time to work and then, if desired, review the chart using
Handout 1: Answer Key.

FRED® Graph Challenge: Make Your Own Graphs Showing Economic Affluence
10.	 Explain that the students are now to make two graphs they think shows the best relationship
between a growing overall economy—based on GDP—and the specific economic indicators in
the data list. GDP must be included on each graph as well as one to three other datasets to
show the correlation-causation relationship. Remind the students that when they add more
than one data series to a graph, they may need to manipulate the y-axis of one or more of
the data series from left to right to make the graph understandable.
	

Next, explain to the students that FRED® allows users to make different types of graphs and
that each type has a general purpose as follows:
•	

A line graph shows a change in one or more economic data series over time.

•	

A bar chart compares related data series.

•	

An area chart can be used to show the volume of one or more measurements.

•	

A scatterplot can show correlation.

•	

A pie chart compares parts of a whole.

11.	 Review the directions in #16 of Handout 1.
	

Tell the students they are to share their graphs with you by one of the methods noted in #17
on Handout 1.

12.	Display Visual 2: Graph Examples. Tell the students that Visual 2 shows actual student-produced
graphs. Some are examples of what a proper graph looks like and others show common mistakes
students make. Discuss each example as follows:
	

Example 1
•	

Which data series are used? (GDP and Real Mean Family Income)

•	

Why might the datasets in this graph be misleading? (GDP is stated in nominal terms,
while Mean Family Income is stated in real terms. This means that the GDP data is not

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

5

	

Money for Nothing: Economic Affluence in Postwar America
adjusted for inflation, while Mean Family Income is.) Emphasize to the students that
comparing real and nominal in the same graph can distort the data and that they should
not do this when making their own charts.
•	

What units are used? (The student changed the units to “percentage change” to better
show correlation.)

•	

Is this graph an accurate reflection of a causal relationship between family income and
an overall growing economy? (Answers may vary but most students should agree that
the lines follow each other closely, signaling at the very least a correlate, if not a causal,
relationship.)

Example 2
•	

Which data series are used? (GDP; Personal consumption expenditures [PCE]: Durable
goods: Motor vehicles and parts; Real Disposable Personal Income: Per Capita; and Real
Mean Family Income)

•	

What units are used? (An index)

•	

Does the graph clearly show an expanding postwar economy? (Answers may vary but
the overall trend lines do show an expanding economy.)

•	

Point out that the student used 1965, the end of the sample period, as the base year for
the index. As a result, it does not show growth in the way it is typically viewed, which can
make it difficult to interpret. It is better to use 1953 as the base year because that is the
first year of the shortest series (Real Mean Family Income).

Example 2 Corrected
•	

This graph uses 1953 as the base year.

•	

Which one of the data lines best illustrates the negative effects of a recession, as indicated
by the gray recession bars on the graph? (Personal consumption expenditures [PCE]: Durable goods: Motor vehicles and parts, which shows purchases of big ticket items, declines
during recessions.)

Example 3
•	

Which data series are used? (Real Disposable Personal Income: Per Capita; GDP; and PCE:
Durable goods: Motor vehicles and parts)

•	

What units are used? (An index)

•	

What error is there in the presentation of the data? (The two y-axes use different ranges,
which skews the presentation.)

Example 3 Corrected
•	

This graph corrects the problem by using only one y-axis.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

6

	

Money for Nothing: Economic Affluence in Postwar America
Example 4
•	

Which data series are used? (Mean Family Income and GDP)

•	

What units are used? (Current dollars and billions of dollars)

•	

Why does the graph look odd and what can be done to present the data in a clearer
manner? (The student left both datasets on the left y-axis, which causes one of the
datasets to look extremely flat.)

Example 4 Corrected
•	

This graph corrects the problem by using both axes.

13.	 Instruct the student to complete #16 and #17 on Handout 1 and then allow time for students
to work. When the assignment is completed, you may want to allow time for students to
share their graphs with the class.
14.	 Distribute a copy Handout 2: Excerpts to each student. Explain to the students that historians
and economists often have differing opinions and interpretations of the impact economic forces
have on a country and its people. They will now read and evaluate excerpts that provide such
an example.
	

Instruct the students to complete #18 on Handout 1. Allow time for students to work and
then discuss their answers using Handout 1: Answer Key.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

7

	

Money for Nothing: Economic Affluence in Postwar America

Visual 1: Economics Terms

Disposable income: The amount of a person’s paycheck
that is available to spend or save. Usually this is calculated by
taking the gross pay minus mandatory withholdings, such as
for personal income tax and Social Security.

Per capita: Per person. Determined by dividing the total
quantity by the total population.

Standard of living: A measure of the goods and services
available to each person in a country; a measure of economic
well-being. Also known as per capita real GDP.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

8

	

Money for Nothing: Economic Affluence in Postwar America

Visual 2: Graph Examples (page 1 of 4)

Example 1
NOTE: Shaded areas indicate recessions as determined by the NBER.
SOURCE: U.S. Bureau of Economic Analysis and U.S. Bureau of the Census. Retrieved from FRED®,
Federal Reserve Bank of St. Louis.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

9

	

Money for Nothing: Economic Affluence in Postwar America

Visual 2: Graph Examples (page 2 of 4)

Example 2
NOTE: Shaded areas indicate recessions as determined by the NBER.
SOURCE: U.S. Bureau of Economic Analysis and U.S. Bureau of the Census. Retrieved from FRED®,
Federal Reserve Bank of St. Louis.

Example 2 Corrected
NOTE: Shaded areas indicate recessions as determined by the NBER.
SOURCE: U.S. Bureau of Economic Analysis and U.S. Bureau of the Census. Retrieved from FRED®,
Federal Reserve Bank of St. Louis.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

10

	

Money for Nothing: Economic Affluence in Postwar America

Visual 2: Graph Examples (page 3 of 4)

Example 3
NOTE: Shaded areas indicate recessions as determined by the NBER.
SOURCE: U.S. Bureau of Economic Analysis. Retrieved from FRED®, Federal Reserve Bank of St. Louis.

Example 3 Corrected
NOTE: Shaded areas indicate recessions as determined by the NBER.
SOURCE: U.S. Bureau of Economic Analysis. Retrieved from FRED®, Federal Reserve Bank of St. Louis.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

11

	

Money for Nothing: Economic Affluence in Postwar America

Visual 2: Graph Examples (page 4 of 4)

Example 4
NOTE: Shaded areas indicate recessions as determined by the NBER.
SOURCE: U.S. Bureau of Economic Analysis and U.S. Bureau of the Census. Retrieved from FRED®,
Federal Reserve Bank of St. Louis.

Example 4 Corrected
NOTE: Shaded areas indicate recessions as determined by the NBER.
SOURCE: U.S. Bureau of Economic Analysis and U.S. Bureau of the Census. Retrieved from FRED®,
Federal Reserve Bank of St. Louis.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

12

	

Money for Nothing: Economic Affluence in Postwar America

Handout 1: Money for Nothing: Economic Affluence in Postwar America
Name: ___________________________________________				Hour: _______

Fred® Graph Challenge: GDP
1.	

Go to the data list at https://research.stlouisfed.org/pdl/966. (It will look like Figure 1.)

A

Figure 1
2.	

Click on “Gross Domestic Product” (Figure 1A) to open that graph. Next, modify the date range
as follows to show only the years 1947-1965:
a.	

OPTION 1: Move the slider bar under the x-axis.

b.	

OPTION 2: Type “1965-12-31” (December 31, 1965) into the date box (Figure 2A) next
to the orange “EDIT GRAPH” button.

A

Figure 2

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

13

	
3.	

Money for Nothing: Economic Affluence in Postwar America
Answer the following questions based on the graph you just created:
a.	

What are the units of the graph?

	
b.	

Measured in these units, how much did GDP increase between 1947 and 1965?

	
4.	

•	

Click the “EDIT GRAPH” button in the
top-right corner.

•	

From the “Units” dropdown menu, select
the last option, “Index (Scale value to 100
for chosen date)” (Figure 3A). Note that
FRED® automatically sets the index to
begin on January 1, 1947 (Figure 3B).

•	

5.	

C

Convert the graph to an index with
“1947-01-01” (January 1, 1947) as the start
date as follows:

To close the panel, click the “X” in the
top-right corner of the panel (Figure 3C).

A

B

Figure 3

Answer the following questions based on the graph you just created:
a.	

How much did the index increase between 1947 and 1965?

	
b.	

What factors may have contributed to this period of sustained growth after World War II?

	
c.	

What general conclusions can be drawn about the overall state of the American economy
during the postwar period?

	

FRED® Graph Challenge: Per Capita Real Disposable Personal Income and Changes
in the U.S. Standard of Living
6.	Review Visual 1: Economics Terms (displayed by the instructor) and answer the following
questions:
a.	

What kinds of goods and services might you purchase with disposable personal income?

	

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

14

	

Money for Nothing: Economic Affluence in Postwar America
b.	

For what might you save a portion of your disposable personal income?

	
c.	

How might changes in disposable personal income affect the national economy?

	
d.	

Why would measuring economic data, such as disposable personal income, using a per
capita measurement as opposed to total dollars be a better way to determine the standard
of living of a country?

	

7.	

8.	

Create a new graph as follows:
•	

Open a new browser tab and go to
http://fred.stlouisfed.org.

•	

In the search bar, type “real disposable
personal income” and hit return.

•	

From the list that appears, click the data
series labeled “Billions of Chained 2009
Dollars, Quarterly, Seasonally Adjusted
Annual Rate” beginning Q1 1947 to open
the graph for that series. (NOTE: The noted
data series may not be the first option
under the main heading.)

A

Figure 4

•	

Adjust the date range to show only 1947 to 1965 (1947-01-01 to 1965-12-31).

•	

In the “EDIT GRAPH” panel, go to the “Modify frequency” dropdown menu and select
“Annual” (Figure 4A).

•	

Close the panel.

To view changes in the standard of living, you
need to view real disposable personal income
relative to the population. First, add the population data series as follows:

A
B

•	

Click the “EDIT GRAPH” button.

•	

Click the “ADD LINE” tab (Figure 5A) and
C
type “POPH” in the search box (Figure 5B).
Figure 5
(“POPH” is the FRED® series ID code for
the data series “National Population,
Annual, Persons, Not Seasonally Adjusted, 1900-1999.”) Select the data series shown,
“National Population,” and click “Add data series” (Figure 5C).

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

15

	
9.	

Money for Nothing: Economic Affluence in Postwar America
Now change the axis for the population data as
follows:
•	

In the “EDIT GRAPH” panel, click the
“FORMAT” tab.

•	

Under “LINE 2,” change the “Y-Axis position” from “Left” to “Right” (Figure 6A).

•	

Close the panel. The graph now displays
Real Disposable Personal Income on the
left axis and the National Population on
the right axis.

10.	 Answer the following questions based on the
graph you just created:
a.	

What is now measured on the left y-axis
and what are the units?

	
b.	
	
c.	

A

What is now measured on the right y-axis?
Figure 6
Why is it important for the graph to look this way?

	
11.	 You will now use the FRED® formula tool to
better visualize real increases in the U.S.
standard of living by calculating per capita real
disposable personal income. Manipulate the
data using exponents as follows:
•	

Click the “EDIT GRAPH” button.

•	

Click the “EDIT LINES” tab and select
“EDIT LINE 1.”

•	

In the “Customize Data” bar, type
“POPH” (Figure 7A), select “National Population,” and then click “Add” (Figure 7B).

B

A

Figure 7

12.	 In the “Formula” bar, type “(a*10^9)” (Figure 8A) and click “Apply.” Notice (on the left y-axis)
that the amount of real disposable personal income increased by a factor of 1 billion. Exponents
are used in the formula to standardize the data units. That way, during the next step, per capita
disposable personal income can be calculated accurately.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

16

	

Money for Nothing: Economic Affluence in Postwar America

A
Figure 8

A
Figure 9

13.	 You will now take the new real disposable personal income amount and divide it by the total
population to find per capita real disposable personal income. To do this go back to the formula
bar for Edit Line 1 and modify it to “(a*10^9)/b” (Figure 9A) and click “Apply.”
14.	 Answer the following questions based on the graph you just created:
a.	

What was per real capita personal income in 1947 and in 1965?

	
	
b.	

By what amount and percentage did real per capita personal income increase during this
postwar period?

	
	
c.	

What was the national population in 1947 and in 1965?

	
	
d.	

By approximately how many people and what percentage did the national population
increase during this postwar period?

	
	
e.	

Why would the national population increase so dramatically following World War II?

	
f.	

Why is it so economically significant that both lines trend upward during this period?

	

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

17

	

Money for Nothing: Economic Affluence in Postwar America
g.	

What is the relationship between real per capita disposable personal income and real GDP?

	

h.	

On average, between 1947 and 1965, did Americans have more, less, or about the same
amount of disposable personal income?

	

FRED® Public Data Series Analysis
15.	 Go back to the data list at https://research.stlouisfed.org/pdl/966. For each data series, adjust
the date range to show only 1947 to 1965 and fill out the chart on page 20 as follows:
	

Type of spending: Identify which type of economic data are presented: (i) government
spending (any level of government expenditures), (ii) private spending (by businesses, corporations, companies, etc.), or (iii) consumer spending (individual or household spending).

	

Data presented: Describe in simple terms what the money is spent on or what the
measure represents.

	

Units measured: Identify the unit of measure used.

	Frequency: Identify the frequency at which the data are reported.
	Correlation/causation: Identify if there is a relationship between the data series or if it
can be argued that one data series directly causes a change in GDP.

FRED® GRAPH Challenge: Make Your Own Graphs Showing Economic Affluence
16.	 Create two graphs from a minimum of two and a maximum of four data series from the data
list that you think show the best relationship between the growing overall postwar economy
(GDP) and the economic indicators on the list. When creating these graphs, consider the
following:
a.	

What is the best unit to use when comparing these dataset to GDP? (“Raw” numbers,
percent change, percent change from year ago, Index (Scale value to 100 for chosen
date), etc.)

b.	

Is the comparison between the multiple datasets accurate? (Example: Avoid comparing real
datasets with nominal datasets because one accounts for inflation but the other does not.)

c.	

What frequency of the data series would show the trends most clearly? (Monthly, quarterly,
annual, etc.)

d.	

When should you plot a second data series on a different y-axis?

e.	

Which style of graph would best illustrate the relationship? (Bar, line, scatterplot, area, etc.)

f.	

Should the dates of the graph be adjusted to stay within the postwar period of 1947-1965?

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

18

	

Money for Nothing: Economic Affluence in Postwar America

17.	 Share each completed graph with the instructor as follows:
•	

Click the “Share Links” button (Figure 10A) below the
graph and select “page short URL” (Figure 10B).

•	

Click the “Copy” button.

•	

Either paste the URL into your student sheet or send an
email to your instructor.

A
B

Figure 10

Summation Questions
18.	Read Handout 2: Excerpts (provided by the instructor) and then answer the summation questions based on the writings of Brink Lindsey and John Kenneth Galbraith.
a.	

Does Lindsey describe the postwar economy in generally favorable or unfavorable terms?
Provide one example from the passage that supports your analysis.

	

b.	

Does Galbraith describe the postwar economy in generally favorable or unfavorable
terms? Provide one example from the passage that supports your analysis.

c.	

Of the two selections, whose analysis do you agree with more in describing the American economy after World War II? Why?

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

19

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

Sales by Retail Stores for U.S.

Public New Construction Activity, Highways for U.S.

Public Construction for U.S.

Private Commercial, Industrial,
and Public Utility Construction
for U.S.

Personal consumption
expenditures: Durable goods:
Motor vehicles and parts

Number of New Private Nonfarm
Housing Units Started for U.S.

Mean Family Income in the U.S.

Government current
expenditures: Education:
Elementary and secondary

Full-time and part-time
employees: State and local
general government: Education

Graph title

Type of
spending
Data presented

Units measured

FRED® Public Data Series Analysis
Frequency

Correlation/causation

	
Money for Nothing: Economic Affluence in Postwar America

20

	

Money for Nothing: Economic Affluence in Postwar America

Handout 1: Money for Nothing: Economic Affluence in Postwar America—
Answer Key

Fred® Graph Challenge: GDP
1.	

Go to the data list at https://research.stlouisfed.org/pdl/966. (It will look like Figure 1.)

A

Figure 1
2.	

Click on “Gross Domestic Product” (Figure 1A) to open that graph. Next, modify the date range
as follows to show only the years 1947-1965:
a.	

OPTION 1: Move the slider bar under the x-axis.

b.	

OPTION 2: Type “1965-12-31” (December 31, 1965) into the date box (Figure 2A) next
to the orange “EDIT GRAPH” button.

A

Figure 2

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

21

	
3.	

4.	

Money for Nothing: Economic Affluence in Postwar America
Answer the following questions based on the graph you just created:
a.	

What are the units of the graph?

	

Billions of dollars

b.	

Measured in these units, how much did GDP increase between 1947 and 1965?

	

From $243.08 billion to $773.10 billion (a net increase of $530 billion)

•	

Click the “EDIT GRAPH” button in the
top-right corner.

•	

From the “Units” dropdown menu, select
the last option, “Index (Scale value to 100
for chosen date)” (Figure 3A). Note that
FRED® automatically sets the index to
begin on January 1, 1947 (Figure 3B).

•	

5.	

C

Convert the graph to an index with
“1947-01-01” (January 1, 1947) as the start
date as follows:

To close the panel, click the “X” in the
top-right corner of the panel (Figure 3C).

A

B

Figure 3

Answer the following questions based on the graph you just created:
a.	

How much did the index increase between 1947 and 1965?

	

By a factor of 2.18 (the equivalent of a 218 percent increase in GDP)

b.	

What factors may have contributed to this period of sustained growth after World War II?

	

Answers will vary but should include the baby boom, early globalization, and the United
States being the world’s largest economy after the war.

c.	

What general conclusions can be drawn about the overall state of the American economy
during the postwar period?

	

Answers will vary but should generally describe a time of massive economic expansion
and probable prosperity for most Americans.

FRED® Graph Challenge: Per Capita Real Disposable Personal Income and Changes
in the U.S. Standard of Living
6.	Review Visual 1: Economics Terms (displayed by the instructor) and answer the following
questions:
a.	

What kinds of goods and services might you purchase with disposable personal income?

	

Answers will vary but should include both essentials such as food and rent and
non-essentials such as entertainment and recreation.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

22

	

7.	

8.	

Money for Nothing: Economic Affluence in Postwar America
b.	

For what might you save a portion of your disposable personal income?

	

Big ticket items, such as a car, a down payment for a home purchase, or college tuition

c.	

How might changes in disposable personal income affect the national economy?

	

Increases in consumer spending allow businesses to earn larger profits and expand further,
creating a snowball effect that allows the economy to expand at a rapid rate.

d.	

Why would measuring economic data, such as disposable personal income, using a per
capita measurement as opposed to total dollars be a better way to determine the standard
of living of a country?

	

The per capita average, as opposed to total dollars, better shows how the standard of
living changes over time. (It is also more relatable to students.)

Create a new graph as follows:
•	

Open a new browser tab and go to
http://fred.stlouisfed.org.

•	

In the search bar, type “real disposable
personal income” and hit return.

•	

From the list that appears, click the data
series labeled “Billions of Chained 2009
Dollars, Quarterly, Seasonally Adjusted
Annual Rate” beginning Q1 1947 to open
the graph for that series. (NOTE: The noted
data series may not be the first option
under the main heading.)

A

Figure 4

•	

Adjust the date range to show only 1947 to 1965 (1947-01-01 to 1965-12-31).

•	

In the “EDIT GRAPH” panel, go to the “Modify frequency” dropdown menu and select
“Annual” (Figure 4A).

•	

Close the panel.

To view changes in the standard of living, you
need to view real disposable personal income
relative to the population. First, add the population data series as follows:

A
B

•	

Click the “EDIT GRAPH” button.

•	

C
Click the “ADD LINE” tab (Figure 5A) and
type “POPH” in the search box (Figure 5B).
Figure 5
(“POPH” is the FRED® series ID code for
the data series “National Population,
Annual, Persons, Not Seasonally Adjusted, 1900-1999.”) Select the data series shown,
“National Population,” and click “Add data series” (Figure 5C).

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

23

	
9.	

Money for Nothing: Economic Affluence in Postwar America
Now change the axis for the population data as
follows:
•	

In the EDIT GRAPH panel, click the
“FORMAT” tab.

•	

Under “LINE 2,” change the “Y-Axis position” from “Left” to “Right” (Figure 6A).

•	

Close the panel. The graph now displays
Real Disposable Personal Income on the
left axis and the National Population on
the right axis.

10.	 Answer the following questions based on the
graph you just created:
a.	

What is now measured on the left y-axis
and what are the units?

	

Real disposable personal income in billions
of chained 2009 dollars

b.	

What is now measured on the right y-axis?

	

The national population in persons (the
total population of the United States)

c.	

Why is it important for the graph to look this way?

	

A double y-axis allows for visual comparison between the two data series.

A
Figure 6

11.	 You will now use the FRED® formula tool to
better visualize real increases in the U.S.
standard of living by calculating per capita real
disposable personal income. Manipulate the
data using exponents as follows:

B

A

•	

Click the “EDIT GRAPH” button.

•	

Click the “EDIT LINES” tab and select
“EDIT LINE 1.”

•	

In the “Customize Data” bar, type
“POPH” (Figure 7A), select “National Population,” and then click “Add” (Figure 7B).

Figure 7

12.	 In the “Formula” bar, type “(a*10^9)” (Figure 8A) and click “Apply.” Notice (on the left y-axis)
that the amount of real disposable personal income increased by a factor of 1 billion. Exponents
are used in the formula to standardize the data units. That way, during the next step, per capita
disposable personal income can be calculated accurately.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

24

	

Money for Nothing: Economic Affluence in Postwar America

A
Figure 8

A
Figure 9

13.	 You will now take the new real disposable personal income amount and divide it by the total
population to find per capita real disposable personal income. To do this go back to the formula
bar for Edit Line 1 and modify it to “(a*10^9)/b” (Figure 9A) and click “Apply.”
14.	 Answer the following questions based on the graph you just created:
a.	

What was per real capita personal income in 1947 and in 1965?

	

1947: $9,110

	

1965: $14,147

b.	

By what amount and percentage did real per capita personal income increase during this
postwar period?

	

Amount: $5,037

	

Percentage: 55 percent

c.	

What was the national population in 1947 and in 1965?

	

1947: Approximately 144 million

	

1965: Approximately 194 million

d.	

By approximately how many people and what percentage did the national population
increase during this postwar period?

	

People: Approximately 50 million

	

Percentage: Approximately 35 percent

e.	

Why would the national population increase so dramatically following World War II?

	

Answers will vary but should include the baby boom and longer life expectancy thanks to
medical innovations.

f.	

Why is it so economically significant that both lines trend upward during this period?

	

Answers will vary, but it is important for students to understand that not only were individuals becoming more economically prosperous, but that it was happening at the same
time the population was dramatically increasing, which historically has made it difficult
for per capita disposable personal income to grow.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

25

	

Money for Nothing: Economic Affluence in Postwar America

g.	

What is the relationship between real per capita disposable personal income and real GDP?

	

Increases in real per capita disposable personal income mirror increases in real GDP very
closely. This similarity suggests that there is a causation relationship where one data point
directly influences the other.

h.	

On average, between 1947 and 1965, did Americans have more, less, or about the same
amount of disposable personal income?

	

More. The rate of growth of real per capita disposable personal income was greater than
the rate of growth of the population.

FRED® Public Data Series Analysis
15.	 Go back to the data list at https://research.stlouisfed.org/pdl/966. For each data series, adjust
the date range to show only 1947 to 1965 and fill out the chart on page 20 as follows:
	

Type of spending: Identify which type of economic data are presented: (i) government
spending (any level of government expenditures), (ii) private spending (by businesses, corporations, companies, etc.), or (iii) consumer spending (individual or household spending).

	

Data presented: Describe in simple terms what the money is spent on or what the
measure represents.

	

Units measured: Identify the unit of measure used.

	Frequency: Identify the frequency at which the data are reported.
	Correlation/causation: Identify if there is a relationship between the data series or if it
can be argued that one data series directly causes a change in GDP.

FRED® GRAPH Challenge: Make Your Own Graphs Showing Economic Affluence
16.	 Create two graphs from a minimum of two and a maximum of four data series from the data
list that you think show the best relationship between the growing overall postwar economy
(GDP) and the economic indicators on the list. When creating these graphs, consider the
following:
a.	

What is the best unit to use when comparing these dataset to GDP? (“Raw” numbers,
percent change, percent change from year ago, Index (Scale value to 100 for chosen
date), etc.)

b.	

Is the comparison between the multiple datasets accurate? (Example: Avoid comparing real
datasets with nominal datasets because one accounts for inflation but the other does not.)

c.	

What frequency of the data series would show the trends most clearly? (Monthly, quarterly,
annual, etc.)

d.	

When should you plot a second data series on a different y-axis?

e.	

Which style of graph would best illustrate the relationship? (Bar, line, scatterplot, area, etc.)

f.	

Should the dates of the graph be adjusted to stay within the postwar period of 1947-1965?

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

26

	

Money for Nothing: Economic Affluence in Postwar America

17.	 Share each completed graph with the instructor as follows:
•	

Click the “Share Links” button (Figure 10A) below the
graph and select “page short URL” (Figure 10B).

•	

Click the “Copy” button.

•	

Either paste the URL into your student sheet or send an
email to your instructor.

A
B

Figure 10

Summation Questions
18.	Read Handout 2: Excerpts (provided by the instructor) and then answer the summation questions based on the writings of Brink Lindsey and John Kenneth Galbraith.
a.	

Does Lindsey describe the postwar economy in generally favorable or unfavorable terms?
Provide one example from the passage that supports your analysis.

	

Answers will vary, but Lindsey generally supports the idea of postwar America being a
very positive and prosperous land. He cites multiple statistics such as life expectancy and
appliance ownership as signs of an affluent society.

b.	

Does Galbraith describe the postwar economy in generally favorable or unfavorable
terms? Provide one example from the passage that supports your analysis.

	

Answers will vary, but Galbraith generally views postwar economic affluence as a false
sign of prosperity and instead focuses on crumbling inner cities because of, for example,
suburbanization and a throwaway culture doing harm to the environment.

c.	

Of the two selections, whose analysis do you agree with more in describing the American
economy after World War II? Why?

	

Answers will vary.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

27

Billions of dollars

Current dollars

Thousands of
units started

Billions of dollars

Millions of
current dollars

Millions of
current dollars

Millions of
current dollars

Money spent on grade
school and high school
education programs
Average family income
including wages, salaries,
retirement benefits, and
government assistance
The number of new houses
on which construction was
started
Total individual purchases
of cars, truck, and parts for
them
Construction of any kind by
private companies and public
utilities
All spending on new
construction projects by
local, state, and federal
governments

Government

Consumer

Consumer

Consumer

Private

Government current
expenditures: Education:
Elementary and secondary

Mean Family Income in the U.S.

Number of New Private Nonfarm
Housing Units Started for U.S.

Personal consumption
expenditures: Durable goods:
Motor vehicles and parts

Private Commercial, Industrial,
and Public Utility Construction
for U.S.

All spending on construction
of new highways in the U.S.

Total spending at retail
stores

Government

Government

Consumer

Public Construction for U.S.

Public New Construction Activity, Highways for U.S.

Sales by Retail Stores for U.S.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

Millions of dollars

Thousands
of people

Government

Number of teachers and
staff hired by state and local
governments for public
education

Full-time and part-time
employees: State and local
general government: Education

Units measured

Data presented

Type of
spending

Graph title

FRED® Public Data Series Analysis

Monthly

Monthly

Annual

Monthly

Annual

Monthly

Annual

Annual

Annual

Frequency

Answers will vary.

Answers will vary.

Answers will vary.

Answers will vary.

Answers will vary.

Answers will vary.

Answers will vary.

Answers will vary.

Answers will vary.

Correlation/causation

	
Money for Nothing: Economic Affluence in Postwar America

28

	

Money for Nothing: Economic Affluence in Postwar America

Handout 2: Excerpts
Excerpt from Brink Lindsey’s The Age of Abundance: How Prosperity Transformed America’s
Politics & Culture1
America in the years after World War II was the scene of a great revolution in human affairs: the
advent of mass affluence. With its vast natural wealth beckoning, unsettled spaces beyond the
frontier, America had always been known as a land of plenty. But here was something entirely
new: comforts conveniences and opportunities previously only dreamed of, or at best the preserve
of a tiny few, were now made available to the broad mainstream of a sprawling populous nation.
American capitalism now burst forth with heightened productive forces that opened a “new frontier,”
an unexplored realm of dizzying choices and proliferating possibilities.
In the Cape Cods and ranch houses of the new suburban sprawl, in the office buildings filled with
white collar knowledge workers, on the highways and airwaves that wove a sprawling continent
into a unified consuming culture, humanities relationship with nature was being redefined and the
old rules of social interdependence rewritten. The realm of freedom had arrived.
Thanks to breakthroughs in public health and medical science, average life expectancy stood at 68.2
years in 1950—21 years longer than at the turn of the century. Public utilities and domestic appliances had rescued home life from much of its age-old drudgery. By 1960 nine out of ten U.S. households had mechanical refrigerators, and 73% owned washing machines. Those appliances had not
been available to anyone, rich or poor, a half century earlier.

Excerpt from John Kenneth Galbraith’s The Affluent Society2
The family which takes its mauve and cerise, air conditioned, power steered and power braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted
buildings, billboards and posts for wires that should long since have been put underground. They
pass on into a countryside that has been rendered largely invisible by commercial art. (The goods
which the latter advertise have an absolute priority in our value system. Such aesthetic considerations
as a view of the countryside accordingly come second. On such matters, we are consistent.) They
picnic on exquisitely packaged food from a portable icebox by a polluted stream and go on to spend
the night at a park which is a menace to public health and morals. Just before dozing off on an air
mattress, beneath a nylon tent, amid the stench of decaying refuse, they may reflect vaguely on the
curious unevenness of their blessings. Is this, indeed, the American genius?
Lindsey, Brink. The Age of Abundance: How Prosperity Transformed America’s Politics & Culture. New York: HarperCollins, 2007, pp. 32-33.

1

Galbraith, John Kenneth. The Affluent Society. New York: Houghton Mifflin, 1958, p. 253.

2

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

29

	

Money for Nothing: Economic Affluence in Postwar America

AP U.S. History Curriculum Alignment
•	

Work, Exchange & Technology

	

WXT-3.0. Analyze how technological innovation has affected economic development and
society.

•	

Culture & Society

	

CUL-2.0. Explain how artistic, philosophical, and scientific ideas have developed and shaped
society and institutions.

•	

Period Timeline Alignment

	

Key Concept 7.1: Growth expanded opportunity, while economic instability led to new efforts
to reform U.S. society and its economic system.

	

I.	
	

The United States continued its transition from a rural, agricultural economy to an urban, 	
industrial economy led by large companies.

		
A.	 New technologies and manufacturing techniques helped focus the U.S. economy 	
		
on the production of consumer goods, contributing to improved standards of living, 	
		
greater personal mobility, and better communications systems.
	

Key Concept 7.2: Innovations in communications and technology contributed to the growth of
mass culture, while significant changes occurred in internal and international migration patterns.

	

I.	
	

Popular culture grew in influence in U.S. society, even as debates increased over the effects 	
of culture on public values, morals, and American national identity.

		
A.	 New forms of mass media, such as radio and cinema, contributed to the spread of 	
		
national culture as well as greater awareness of regional cultures.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

30

	

Money for Nothing: Economic Affluence in Postwar America

Standard and Benchmarks
College, Career, and Civic Life (C3) Framework for Social Studies State Standards
Dimension 2: Applying Disciplinary Concepts and Tools
•	

Economics: The National Economy

	

D2.Eco.10.9-12. Use current data to explain the influence of changes in spending, production,
and the money supply on various economic conditions.

	

D2.Eco.13.9-12. Explain why advancements in technology and investments in capital goods
and human capital increase economic growth and standards of living.

•	

History: Historical Sources & Evidence

	

D2.His.9.9-12. Analyze the relationship between historical sources and the secondary interpretations made from them.

•	

History: Causation & Argument

	

D2.His.16.9-12. Integrate evidence from multiple relevant historical sources and interpretations
into a reasoned argument about the past.

Dimension 3: Gathering & Evaluating Sources
•	

D3.1.9-12. Gather relevant information from multiple sources representing a wide range of
views while using the origin, authority, structure, context, and corroborative value of the
sources to guide the selection.

Voluntary National Content Standards in Economics
Standard 15: Economic Growth. Investment in factories, machinery, new technology, and in the
health, education, and training of people stimulates economic growth and can raise future standards
of living
•	

Benchmarks: Grade 12

	

Analyze real Gross Domestic Product (GDP) per capita data for several periods in history, identifying periods during which the United States experienced rapid economic growth; identify
the factors that contributed to this growth.

© 2018, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education.	

31


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102