Getting By: Earners Confront Changing Real Incomes

Basic economic arithmetic meant not every institution or individual could keep up with the rising cost of living. The American economy was nearing the short-term limit of its productive capacity by 1916. Compared to 1916, a bad crop year, the physical production of agriculture rose 4 percent in 1917 and was almost 10 percent higher by 1918, but manufacturing declined slightly, down almost 1½ percent in 1918. In real dollars, per capita gross domestic product dipped slightly in 1917 and peaked in 1918 just 3.7 percent above 1916. This modest growth and more was consumed by war costs—approximately 11.5 percent of total GDP in 1917 and 23.9 percent in 1918.