Inflation.

As the 1980 presidential campaign began, the U.S. economy was in a shambles. The inflationary trend that began in the late 1960s, as Lyndon Johnson tried to fund both the Vietnam War and his Great Society social programs, had continued unabated through the 1970s. The inflation rate hit double-digit levels by 1975 and stayed high. Real wages had peaked in 1973. Then inflation began taking a heavy toll, and they declined 18 percent between the early 1970s and the early 1980s. In 1979 a temporary stop in the flow of Iranian oil, coupled with an OPEC price hike, caused a major oil shortage. That year gasoline prices went up 52 percent; heating oil prices increased by 73 percent; and there were long lines at gas stations. The price increases added to inflationary pressures in the United States and most western countries. They also contributed to higher balance-of-payments deficits for the...