The growth of Western countries since the end of the last war stands out for both its scale and its duration. Capitalist economies had never experienced such a prolonged period of prosperity. Recessions were shallow and brief, particularly in Europe. Whereas before the war it was commonly said that “the European economy caught pneumonia when the United States sneezed,” the American recession of 1954 had no significant impact on Europe. This observation is supported by the data illustrated in figures 22 and 24. The experience of the past twenty years challenges the traditional interpretation of economic cycles. Postwar growth appears as a long expansion, varying in intensity, interrupted only by minor recessions in 1949, 1951, 1952, and 1958 in both Europe and the United States. The 1954 recession was confined to the United States.
Since the end of the war, four recessions occurred in the United States, each causing only a slight reduction in national output: 1949, 1954, 1958, and 1960–1961. The reversal of economic trends was extremely limited or barely noticeable on an annual basis, though more visible in quarterly production estimates. Periods of expansion were significantly longer than periods of contraction. Between 1945 and 1961, expansions lasted approximately 49 quarters, compared to 14 quarters of recession.
The average duration of recessions was longer in the United States than in most European countries. However, Great Britain ranked highest, with an average exceeding seven quarters, followed by the United States with 4.7 quarters, and Belgium and Canada with 4.5. Germany, which led Western countries in growth rate, also showed the strongest performance in reducing fluctuations. From the end of the war to 1961, its average recession lasted only one quarter, while expansions averaged 18.5 quarters. Countries with higher growth rates tended to experience longer expansion phases.
Overall unemployment remained exceptionally low. From 1950 to 1960, the annual average unemployment rate was 4.5% in the United States, 2.5% in Great Britain, 4.1% in Germany, and 1.3% in France. Excluding Switzerland, France recorded the lowest unemployment among Western countries. These averages shifted during the 1958–1960 period: the U.S. rate rose to 5.8% and Great Britain’s to 2.9%, while Germany’s declined from 4.1% to 1.8%, partly due to the end of refugee inflows from Eastern Europe and the stabilization of labor supply. Unemployment remained relatively low, and in several countries—particularly France and Great Britain—labor shortages emerged. Tensions in labor markets contributed to inflationary pressures and rising prices. While deflation and unemployment dominated the economic concerns of the 1930s, inflation and price increases became the primary challenges for Western economies between 1950 and 1960. External imbalances linked to inflation led some governments to adopt policies aimed at “sound expansion” or “balanced growth.” The central challenge was to achieve maximum growth compatible with price stability and external equilibrium—often described as a “magic triangle” that many governments sought to resolve.
The causes of growth
In the Study of the Economic Situation of Europe published in 1949, experts from the United Nations projected that industrial production in Europe would increase by 40% to 60% over the decade 1949–1959. In practice, a 40% increase was achieved by 1954, 50% by 1955, and 60% by 1956. The causes of this exceptional growth, considering historical patterns since the beginning of industrialization, are multiple and cannot be measured with precision. They relate both to economic policy and to a deeper understanding of fundamental economic mechanisms, as well as to key structural conditions of the postwar environment.
Economic reconstruction played a central role. The international cooperation effort between 1945 and 1950 introduced new policy tools that enabled Western Europe to recover rapidly from wartime destruction. After initial hesitation, the adoption of the Marshall Plan provided devastated countries with the means to obtain essential resources for reconstruction without direct cost. The multilateral nature of this assistance contributed significantly to its effectiveness. The efforts of the Organisation for European Economic Co-operation (OEEC) to establish intra-European payments on a multilateral basis were facilitated by American aid. In parallel, intra-European trade expanded, and liberalization policies encouraged countries such as France to gradually adapt to increased competition, thereby improving productivity.