The Economic Depression between 1979-83 in the United States of America was one of the all-time low points in national GDP output, although it failed to reach the abysmal lows of 1889-94 or 1924-31, both of which have lingering monikers such as "the Depression of 1889" or the "Smith Slump/Terrible Twenties."
However, due to the increased role of the United States as a center for international capital and investment, especially in the Western Hemisphere and much of Africa/Oceania, this economic collapse had considerably farther-reaching effects and the symptoms lingered long into the 1990's - in fact, the period following the depression are referred to as "the lost decade" (1984-94), and two severe recessions known as the "rebound recession" and the "Romney recession" (after US President Mitt Romney) occurred in 1991-93 and 1996-98, respectively.
The depression was caused by four simultaneous forces that culminated in the "perfect economic storm," as economist Bernard Kodder of the Imperial Financial Chamber once said.
First, the United States had enjoyed an unprecedented nine-year period of prosperity, starting with the building boom of 1970 and the deregulation of the financial industry in 1973 in one of Clyde Dawley's earliest moves as President. With easy credit available and an explosion in commercial and retail industry, many workers began defecting from the reliable manufacturing jobs previously held by Americans.
Second, the dive in American manufacturing coincided with an increase in overseas competition. While markets had previously chosen between American or French products, the 1970's saw a boom in goods produced in China by Japanese companies, called the "Iron Triangle of Exports" - Japanese companies sold Chinese goods to American and Oceanian markets at huge profits. The rise of the Asian Powers - Japan as a financial hub and China as its enormously successful manufacturing base - did not go unnoticed by the West, but France's chokehold over African and Mideastern markets began to remove American companies from otherwise lucrative markets.
Third, the ambitious social programs enacted by Adam Eisler in the late 1970's prior to his assassination were timed poorly. Economists had long suggested that the "Sunny Seventies" were unsustainable and that a heady recession would occur soon. The Eisler regime, under the assumption that the economic growth would sustain programs that were previously unaffordable, used their control of government to pass sweeping welfare programs that increased the federal budget drastically.
Fourth, the Eisler government inherited a dangerous situation brewing in Brazil - Dawley had supported the Colombian government and the rebels they were funding with materiel, but when it became clear that the Colombian government was facing an all-out Brazilian invasion, Eisler committed soldiers to the conflict. Soon, a draft was enacted and billions of dollars committed to the escalation of the Brazilian War, which was extremely unpopular in the United States.
In May, 1979, Wall Street was hit with its worst-ever four-day period, losing almost a third of its accumulated value over the four-day period known as the "Meltdown." Vast amounts of firings followed as banks called in their loans or were forced to shut down completely. By July, the entire US financial system had virtually collapsed. The French Empire refused to loan their Cold War enemy any money without collateral (i.e. major Cold War concessions), and the spiral continued so that by the fall, the depression had sunk in with almost five million jobs lost nationwide. The National Bank slashed interest rates in September, but the Chairman, George Bruce, was fired only a few days later.
The federal government found itself swamped. The social welfare programs were no longer affordable and the Brazilian War's cost in life and money was only growing by the month. Racial strife was also on the increase after the sudden wave of unemployment, despite a previous decade of unprecedented racial peace and harmony.