During the 1970s, the American economy was beset by severe problems. These included sluggish growth, rapidly rising prices and interest rates, relatively high rates of unemployment, mounting foreign competition, and a stagnant stock market. Especially worrisome was a slowdown in productivity.

But in the mid-1990s, the United States experienced an economic boom due to a sharp decline in the price of basic commodities such as oil, the restructuring of American businesses in the 1980s and early 1990s, which made them more efficient and adaptable, and the growth of new computer and communication technologies.

The end of the Cold War unleashed violent ethnic, religious, national conflicts, especially in the Balkans, the Middle East, and Africa. The first important foreign policy crisis of the post-Cold War era involved Panama, which the United States invaded in 1989 to safeguard American lives and protect the Canal Zone. This was followed in 1990 by Iraq’s invasion and occupation of Kuwait, which was reversed by the Gulf War. The breakup of the former Yugoslavia resulted in U.S. intervention in Bosnia and Kosovo.