According to this graph depicting the American GDP in the 20th century, between 1939-45 the GDP doubled from ~$1T to ~$2T. This seems unintuitive - I'd have thought that the war would have redirected resources toward the war machine rather than domestic production. What happened to make GDP shoot up like that? Was the rest of the economy booming too? I'm assuming the war was the cause of the boom because the period of the boom exactly matches that of the war, and the GDP drops significantly after the war finished.
To answer this question there needs to be some basic economic explanation as well since this is essentially economic history.
America was already on the road to recovery since FDR implemented his new deal policies. WWII kicked this into overdrive resulting in a boom in the American economy.
First of a little basic economics. GDP consist of Consumer spending, investment, government spending and export income minus import expenditure. FDR practiced what at that time was radical Keynesian economics which postulated that an increase in government spending would boost the economy by increasing GDP exponentially due to the multiplier effect. This is largely counter intuitive for people who do not study economics. And given this is not a economics forum if you would like a more detail explanation I leave it up to you to explore further.
When WWII occurred America began to start rearmament, which was essentially all government spending boosting their GDP. This increased further once the war started. It had a two fold effect as money was bring injected into the economy via payments made to manufacturers for arms and pay given to soldiers which they then spent. This also built up the US industrial base further which allowed them to produce more thus creating more jobs. At the same time allied countries where in a dire state. The UK alone was purchasing massive amounts of arms using their gold reserves. Thus by the end of the war the US held a majority of the world's gold and since they were still on the gold standard until the post war Bretton Woods System. It made the US GDP boom due to all the export revenue it was earning selling arms.
Thus, the US economy boomed lasting all the way into the 1960s until the Nixon Shocks. This is not to say war is good for the economy in all circumstances. The economic spending must circulate back to consumers for it to be beneficial overall and in the long run. Lastly WWII was unique and a total war which mobilised the whole country. Wars since then have been limited wars and thus did not have the same economic impact.
