Recession of 1958

There were many major factors in the decline that exerted a growing downward pressure on production and employment, resulting in a general reduction of economic activity.

[1] Federal Reserve economists believed that the Eisenhower administration had contributed to the recession by cutting back on United States Department of Defense purchases in 1957.

Due to a severe drop in unfulfilled orders for durable goods and a decreasing demand for commodities and other materials, the recession of 1958 forced over five million people out of work.

The continued upward creep of prices became a cause of concern among many well-known economists analyzing the economy, such as Arthur F. Burns.

Government efforts to promote a prompt economic recovery played an important role in the moderation of the recession.

The United States Department of Agriculture projects for water resource programs and rural electrification were pushed ahead.

[3] Finally, in June 1958, the Congress enacted the legislation to authorize federal assistance to the states so that they could lengthen the period of unemployment benefits.

The Federal Reserve made moves once aware of the severity of the situation, lowering the discount rate to 1.75% until conditions began to improve.