- Employment levels were low.
- The inflation rate was high.
The uptick in energy prices quickly undid any check on inflation from wage and price controls or other government actions. The annual inflation rate hit 6.2 percent in 1973 (almost twice the previous year's level), and in 1974 it rose to an astonishing 11 percent, the highest figure in decades. Ordinarily, inflation accompanied economic growth and full or high employment, but the skyrocketing inflation of the 1970s coincided with a sluggish economy and high jobless figures in both the United States and Western Europe. Further, after decades of growth, the value of the gross domestic product began to drop around mid-decade. To describe this unusual combination of higher consumer prices and economic stagnation, economists in the 1960s coined the term stagflation.
National rates of economic misery masked the fact that certain regions and populations were hit much harder than others. Job losses were heaviest in the manufacturing sectors of the Northeast and Midwest. These regions- economic powerhouses in earlier periods-bore the brunt of the United States's decline as an industrial manufacturer in the face of foreign competition. The impact of deindustrialization on older U.S. cities during this era was staggering. Between 1967 and 1987, manufacturing jobs in Chicago dropped by 60 percent and in New York by 58 percent. Many jobs simply disappeared as factories shut down or relocated to other parts of the world. At the same time, employment was migrating to other sectors of the economy, such as service work. Jobs were also drawn to warmer parts of the country, especially Southern and Western states where right-to-work laws lowered labor costs by prohibiting collective bargaining contracts that required companies to hire union members.