The New York Stock Exchange’s stocks lost half of their value in ten weeks in 1929, marking the start of the Great Depression. Businesses faltered and unemployment skyrocketed in the early 1930s as stocks kept falling.
Every fourth worker did not have a job by 1932 and could not provide Master Thesis Services. Many Americans were left penniless as a result of bank failures and the loss of life savings.
Numerous Americans lost their homes because they had neither a job nor any money. Across the nation, the destitute gathered in cardboard shacks known as “Hoovervilles” on the outskirts of cities, while hundreds of thousands of unemployed people crisscrossed the country on foot and in boxcars in vain attempts to find work. Despite the fact that few people were hungry, many others suffered from malnutrition.
Many people found it difficult to understand why the depression had developed and why it could not be addressed in a nation with plenty of resources, the greatest force of skilled labor, and the most productive industry in the world. Furthermore, it was challenging for many to comprehend why people should go without food in a nation with enormous food surpluses.
The rumblings of unhappiness developed greatly in the early 1930s, with the Hoover government, Wall Street speculators, and bankers being blamed. Hunger marches and minor riots were commonplace across the country by 1932.
4 Major Consequences Of The Great Depression
Despite having a significant negative impact on the United States, the Great Depression also had some positive effects. To reduce the possibility of another Depression, for instance, the New Deal programs put in place safeguards.
The 4 major U.S. economic sectors listed below all suffered greatly as a result of the Great Depression.
1.GDP and the national economy (GDP)
The economy contracted by 50 percent in the first five years of the depression. According to the gross domestic product, economic output in 1929 was $105 billion (GDP). More than $1 trillion now would be the equivalent of that.
Beginning in August 1929, the economy shrank. Thirty percent of banks and Cheap Coursework Writing Service USA had failed before the end of the year. The economy contracted by 8.5 percent more in 1930. (BEA). In 1931 and 1932, respectively, the GDP’s growth rate fell by 6.4% and 12.9%. (bestassignmentwriter.co.uk, 2018)
Deflation played a role in some of the contraction. The Consumer Price Index (CPI), a gauge of inflation used by the Bureau of Labor Statistics (BLS), decreased by 25% from 1929 and 1933. 6 Many businesses went bankrupt as a result of declining prices.
In 1934, New Deal expenditure increased GDP growth by 10.8%. In 1935, 12.9 percent, 12.9 percent, and 5.1 percent, respectively, it increased again.
Unfortunately, as a result of the government’s reduction in New Deal spending, the depression resumed, causing the economy to contract by 3.3% and the unemployment rate to increase to 19% in 1938.
Growth increased by 8 percent in 1939 and 8.8 percent in 1940 as a result of World War II preparations. They entered World War II after Japan struck Pearl Harbor the following year. The annual GDP growth rate increased to 17.7%. 8
The economy changed from being a pure free market to a mixed economy as a result of the New Deal and spending for World War II. Its success was largely dependent on government spending. The Great Depression timeline demonstrates that this was a gradual—yet necessary—process.
2.Politics
The Depression had an impact on politics by causing unbridled capitalism to lose its appeal. President Herbert Hoover supported the laissez-faire economy, which was ineffective.
As a result, they chose President Franklin D. Roosevelt in the election (FDR). With government expenditure, the Depression would be gone, according to his Keynesian economics. The New Deal had success. Both the economy and unemployment decreased in 1934.
FDR, though, started to worry about adding to the national debt. The national debt was $22.5 billion in 1933 and $27 billion in 1934. 9 By 1938, he had reduced government spending, and the Depression had returned. (Bonis. 2022)
Nobody wants to commit that error once more. Politicians now frequently turn to expansionary fiscal policy, including tax cuts, deficit spending, and other measures. As a result, the national debt of the United States has reached a very high level.
As government expenditure increased for World War II towards the end of the 1930s and the beginning of the 1940s, the Depression came to a conclusion. The assumption that military spending is beneficial to the economy was born out of this change in spending. Since then, though, the government and economists have discovered that spending on the military is not the best way to generate jobs.
3.Unemployment
4.2 percent of the population was unemployed in 1928, the last year of the Roaring Twenties. That represents a decrease from the normal rate of unemployment. It increased to 8.7 percent more than twice as much by 1930. To 23.6 percent by 1932, it had grown. In 1933, it reached its highest point, peaking at about 25%. Nearly 15 million people lacked employment. Unemployment rate at that time was the highest ever noted.
Rate was brought down to 21.7% in 1934, 20.1% in 1935, 16.9% in 1936, and 14.3% in 1937 thanks to New Deal initiatives. Unemployment rate increased to 19% in 1938, however, due to less vigorous government spending. As you can see from the unemployment rate each year, it stayed above 10% until 1941.
4.Trade
Trade barriers were built by nations to safeguard domestic sectors as their economies deteriorated. Smoot-Hawley tariffs were enacted by Congress in 1930 with the intention of safeguarding American jobs.
Replying nations were other nations. This resulted in the formation of trading blocs with shared national interests and trading currencies. 19 Between 1929 and 1934, the global trade collapsed by 66% (measured in USD). 20 It remained below its 1929 level by the year 1939.
From $1.3 billion at the onset of the Depression to $390 million by 1932, imports from Europe fell dramatically. The same period saw a decrease in exports to Europe as well, from $2.3 billion to $784 million.
Many of the iconic structures of today were constructed by the PWA during the New Deal. The Rockefeller Center, the Chrysler Building, and Dallas’ Dealey Plaza are all iconic structures. Some famous bridges are the Golden Gate Bridge in San Francisco, the Triborough Bridge in New York, and the Overseas Highway in the Florida Keys.
References
Bonis. 2022. (Bank lending in the Great Recession and in the Great Depression) Online available at < https://link.springer.com/article/10.1007/s00181-022-02268-8> Accessed on [ 05 July 2022]
Baw. 2018. (Our Service Offers The Best Assignments Writing Help!) Online available at < https://bestassignmentwriter.co.uk/blog/service-offers-best-assignments-writing-help/> Accessed on [June 7, 2018]
