In the United States, the year 1979 unfolded in rising despair. American international prestige suffered a blow when the Shah of Iran fled his country, and the former American ally of Iran devolved into a geopolitical enemy. American diplomats were seized by Iranian revolutionaries who took over the embassy in Tehran. An attempt to free them using a military operation turned into a catastrophe in the Iranian desert the following year. In July, the Skylab orbiting space laboratory fell back to Earth, generating fears of its impact causing catastrophic damage. President Jimmy Carter achieved a major diplomatic victory with the Camp David Accords between the United States, Israel, and Egypt, but in domestic affairs, he came to be regarded as inept and weak.
Throughout the year, oil shortages which followed the Iranian Revolution and which were exploited by OPEC again produced heating oil and gasoline and diesel fuel price increases. Interest rates on auto loans and mortgages negatively impacted the automobile industry and housing market. Interest rates on thirty-year mortgages climbed into the double digits. Inflation spiraled prices for consumer goods out of control. The following year the economy stalled, unemployment jumped, and prices and interest rates remained high, as the hostage crisis in Iran dragged on throughout the year. For many Americans, 1979 marked the beginning of the end of the American dream, and the conservative coalition between the right-wing conservatives and Christian fundamentalists emerged as a potent political force in the United States.
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