The Rise of Consumerism

One of the factors that fueled the prosperity of the Fifties was the increase in consumer spending. Americans enjoyed a standard of living that was inconceivable to the rest of the world. For example, Vice President Nixon told Nikita Khrushchev in the mid-1950s that there were 60 million cars in the United States, but the Soviet leader simply refused to believe him. When Khrushchev came to visit America, Eisenhower arranged for him to fly in a helicopter over busy roads and parking lots to witness the remarkable signs of abundance for himself.

The time was ripe for Americans to change their spending patterns. The adults of the Fifties had grown up in conditions of economic deprivation, first due to the general poverty of the Great Depression and then due to the rationing of consumer goods World War II. During the Thirties, with unemployment sky-high and the economy in shambles, most people could simply not afford much beyond the basics. During the war, much of the nation's productive capacity shifted to armaments. Everything from sugar to gasoline to tires to nylon stockings were rationed. When consumer goods became available again, people wanted to spend. By the 1950s, though they made up just 6% of the world's population, Americans consumed a third of all the world's goods and services.

The difference between a production society, which focused on meeting basic needs, and a consumption society, which emphasized customers' wants, was like the difference between a 1908 Ford Model T and a 1959 Ford Galaxie. The Model T, available only in black, was a utilitarian piece of machinery intended for basic transportation. The Galaxie, decked out in shiny chrome, was a way to show off and to enjoy a sense of luxury, not just to move from place to place. Within a year or two, it would be obsolete as fashion changed. Blessed with abundant resources, America could afford to turn part of its productive capacity to creating glitz and fashionable waste. An older generation was careful to save and reuse; Americans in the Fifties began to use and throw away. They became "consumers."

Consumerism was driven by advertising. Spending on product promotion boomed, from $6 billion annually in 1950 to more than $13 billion by 1963. "The reason we have such a high standard of living," Robert Sarnoff, president of the National Broadcasting Company, said in 1956, "is because advertising has created an American frame of mind that makes people want more things, better things, and newer things."29

There's no question that advertising drove the purchase of new products, which in turn kept the nation's economic wheels turning. And, as Sarnoff pointed out, Americans did achieve a high standard of living. But some critics questioned whether a reliance on consumers to drive a huge portion of the economy was wise in the long term. Half a century later, our current economic crisis, fueled in part by a collapse of consumer spending, has raised the question again.

A Nation in Debt

Though Eisenhower tried mightily to balance the federal budget, consumers did not follow suit when it came to their own family budgets. Americans had traditionally been thrifty by nature, but in the Fifties they were willing to "buy now, pay later," as automobile advertisements urged. The Federal Housing Administration and the Veteran's Administration both offered low-interest loans to allow families to buy new homes.

The very first credit card——the Diner's Club card—— appeared in 1950. That particular card was limited to paying for meals at a limited number of restaurants, but it was quickly followed by other cards, touching off a dramatic growth in borrowing. Private debt more than doubled from $104.8 billion to $263.3 billion during the Fifties. People borrowed to buy houses, cars, appliances, and even swimming pools.

Buying on credit stimulated the economy, helping many to enjoy the good things in life even as it kept industry busy and unemployment low. Too much debt, as we've seen lately, can be a dangerous thing, but during the Fifties, borrowing mostly helped fuel the robust economy.