Anticipating the drastic reductions in federal spending that demobilization would bring, at least some economists – James Tobin being one of them – predicted a return to the depressed economy of the 1930s

From Cafe Hayek.

"from William F. Shughart’s superb 2010 presidential address – “The New Deal and Modern Memory” – to the Southern Economic Association; specifically, it’s from page 538 of the version of Bill’s address published in the January 2011 issue of the Southern Economic Journal (citations and footnote deleted):

In addition to price controls and rationing, individuals and businesses faced steeply higher tax rates to help finance the war effort.  The war years were in short lean years on the home front as well as being a time of mortal peril for husbands, brothers, and sons shipped overseas.  It is therefore misleading to compare the GNPs of 1941 to 1945 with those of any peacetime year before or since.  World War II may have reduced the unemployment rate and raised the level of production, but it did not bring economic prosperity in any meaningful sense.  (The only benefit of war rationing, of which I am aware, is that an alert entrepreneur invented the bikini so as to conserve on the textiles that were then hard to come by for civilian use.)

America became more prosperous again only after war’s end.  Victory achieved, Washington cut spending sharply, lowered personal and corporate income tax rates, albeit not all the way to prewar levels, and reduced its wartime budget deficits.  Anticipating the drastic reductions in federal spending that demobilization would bring, at least some economists – James Tobin being one of them – predicted a return to the depressed economy of the 1930s.  That never happened, of course.  The economy instead boomed, perhaps owing to the pent-up demands for consumer goods war’s privations had created, to which the private sector quickly responded once freed from wartime controls.  More plausibly, however, America’s post-World War II expansion was driven by reductions in federal tax rates, significant cut-backs in federal government spending, and the reconversion of private industry to the production of civilian goods."