The Austerity of 1946

During WW2, there was forced saving (war bonds) and investment went into the war effort. Hence, the robust economy of 1946 when consumers could draw drawn their savings and consume items that were not not available during the war. Naive regressions did not sufficiently account for this pent up demand. So 1946 is not a counter-example to Keynesian theory, just an example of poor econometric forecasting.

This event is well known to students of economics, and as John Cochrane noted, laid the foundation for the permanent income & life-cycle theories of consumption.

This also fits the pattern after WWI when Harding and Coolidge cut spending and it led to the inflationary period of the twenties. If government borrowing is deflationary, is it any surprise that the Fed has to resort to QE to keep things going?

Isn't the post-war period really hard for the PSST theory too? The economy was in a huge transition, according to the theory it should have been fairly difficult for entrepreneurs to find the correct patterns to employ new workers to create new goods.