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Economy

At the time Nixon took office in 1969, inflation was at 4.7 percent—its highest rate since the Korean War. The Great Society had been enacted under Johnson, which, together with the Vietnam War costs, was causing large budget deficits. Unemployment was low, but interest rates were at their highest in a century. Nixon's major economic goal was to reduce inflation; the most obvious means of doing so was to end the war. This could not be accomplished overnight, and the U.S. economy continued to struggle through 1970, contributing to a lackluster Republican performance in the midterm congressional elections (Democrats controlled both Houses of Congress throughout Nixon's presidency). According to political economist Nigel Bowles in his 2011 study of Nixon's economic record, the new president did little to alter Johnson's policies through the first year of his presidency.

Nixon was far more interested in foreign affairs than domestic policies, but he believed that voters tend to focus on their own financial condition and that economic conditions were a threat to his reelection. As part of his " New Federalism " views, he proposed grants to the states, but these proposals were for the most part lost in the congressional budget process. However, Nixon gained political credit for advocating them. In 1970, Congress had granted the president the power to impose wage and price freezes, though the Democratic majorities, knowing Nixon had opposed such controls throughout his career, did not expect Nixon to actually use the authority. With inflation unresolved by August 1971, and an election year looming, Nixon convened a summit of his economic advisers at Camp David. Nixon's options were to limit fiscal and monetary expansionist policies that reduced unemployment or end the dollar's fixed exchange rate; Nixon's dilemma has been cited as an example of the Impossible trinity in international economics. He then announced temporary wage and price controls, allowed the dollar to float against other currencies, and ended the convertibility of the dollar into gold. Bowles points out,

by identifying himself with a policy whose purpose was inflation's defeat, Nixon made it difficult for Democratic opponents... to criticize him. His opponents could offer no alternative policy that was either plausible or believable since the one they favored was one they had designed but which the president had appropriated for himself.

Nixon's policies dampened inflation through 1972, although their aftereffects contributed to inflation during his second term and into the Ford administration. Nixon's decision to end the gold standard in the United States led to the collapse of the Bretton Woods system. According to Thomas Oatley, "the Bretton Woods system collapsed so that Nixon might win the 1972 presidential election."

After Nixon won re-election, inflation was returning. He reimposed price controls in June 1973. The price controls became unpopular with the public and businesspeople, who saw powerful labor unions as preferable to the price board bureaucracy. The controls produced food shortages, as meat disappeared from grocery stores and farmers drowned chickens rather than sell them at a loss. Despite the failure to control inflation, controls were slowly ended, and on April 30, 1974, their statutory authorization lapsed.