- a growing trade deficit
- rising inflation
By far the biggest challenge Nixon faced as head of a growing federal government came from the nation's economic woes. Nixon entered office during a period of increased industrial competition from Japan and Western Europe and rising international prices for raw materials, especially oil. He also inherited a federal deficit that had escalated along with the war in Vietnam. Both factors contributed to a spike in inflation, which hurt the Republicans in the midterm elections that year. Americans also worried about the declining demand for their manufactured goods. For the first year since 1893, the United States imported more than it exported in 1971.