The Cold War, which lasted from the late 1940s to the early 1990s, had a profound economic impact on American industry. President Dwight D. Eisenhower famously coined the term 'military-industrial complex' to describe the relationship between the government and defense contractors, a relationship that would shape U.S. economic policy for decades. During this period, the U.S. allocated over $7.5 trillion to defense, averaging 7.5% of GDP annually from 1948 to 1986. This massive investment in military capabilities spurred significant growth in various sectors, particularly in aircraft manufacturing, where employment surged from 138,000 in 1939 to over 1.3 million by 1954 [10c7894a].
Technological advancements were another hallmark of the Cold War era, with the development of satellite technology, the ENIAC (the first general-purpose electronic computer), and ARPANET, which laid the groundwork for the modern internet. California's share of national aircraft production rose dramatically from 26% in 1939 to 40% by 1963, highlighting the regional economic shifts driven by defense spending [10c7894a].
Federal research and development funding also saw a remarkable increase, jumping from $74 million in 1940 to $7.3 billion by 1960. However, this era was not without its challenges; the Cold War contributed to inflation and budget deficits, particularly evident in the 1960s and 1980s. In recent years, annual defense spending has exceeded $700 billion, reflecting the ongoing legacy of Cold War policies [10c7894a].
The conclusion of the Cold War led to significant changes in the defense landscape, resulting in cuts to defense spending and industry consolidation throughout the 1990s. This shift marked a transition in American industry, as companies adapted to a new economic reality in the post-Cold War world [10c7894a].