American economy was booming because it was selling massive amounts of weapons and other supplies to the Allied Powers during the war. Indeed, the United States did not enter the war until mid-1917 and did not send troops until the beginning of 1918. Additionally, Wall Street banks and other financial companies were issuing loans and other financial instruments to the Allies and making huge profits over it.
When Americans entered the war, there was a shortage of labor and women were hired and trained to take over jobs that had been occupied by male workers. This is turn helped increase salaries and the consequent spending further boosted the economy.
