Many Americans feared that a drop in military spending following World War II might renew the Great Depression. What really happened is that after years of rationing during the war, people could now spend their money on consumer goods. This purchase power caused strong economic growth in the post-war period. The automobile industry successfully converted back to producing cars, and new industries such as aviation and electronics grew quickly.
Returning soldiers received affordable mortgages, causing a housing boom. The nation's gross national product rose from about $200,000 million in 1940 to more than $500,000 million in 1960. Many Americans moved up to the middle class.
THE MILITARY INDUSTRIAL COMPLEX
The demand for supplies during the war had given rise to a huge military-industrial complex, a term coined by President Dwight D. Eisenhower (served from 1953 – 1961). Due to the cold war, the government maintained a large military and invested in sophisticated weapons.
The Marshall Plan sent economic aid to European countries, which developed into markets for U.S. goods. The government took a central role in economic affairs. The Employment Act of 1946 promoted employment, production, and purchasing power.
The United States also recognized the need to restructure international financial systems, so it led the creation of the International Monetary Fund and the World Bank. These institutions were designed to ensure an open, capitalist international economy.
Businesses merged to create huge, diversified conglomerates. For example, International Telephone and Telegraph bought Sheraton Hotels, Continental Banking, Hartford Fire Insurance, Avis Rent-a-Car, and other companies.
Adapted from Chapter 3 of "Outline of the U.S. Economy" by Christopher Conte and Albert Carr; U.S. Department of State
Source: The Post War Economy: 1945–1960
U.S. Department of State, via ThoughtCo.