Economic downturn and recovery

Economic downturn and recovery

The Great Depression (1929-1933)

  • The Wall Street Crash in October 1929 marked the beginning of the Great Depression.
  • Causes of the Great Depression included overproduction, high tariffs, stock market speculation, and bank failures.
  • Over 25% of Americans were unemployed at the height of the Great Depression.
  • The Great Depression led to significant economic hardship for many Americans, while some profited from the downturn.
  • President Herbert Hoover’s response to the crisis was largely ineffective; he promoted voluntary cooperation in industry and limited government intervention.

New Deal Era (1933-1939)

  • President Franklin D. Roosevelt’s New Deal aimed to provide relief, recovery, and reform.
  • The First New Deal (1933-35) introduced measures such as the Agricultural Adjustment Act (AAA) and the National Industrial Recovery Act (NIRA).
  • The Second New Deal (1935-38) included the Social Security Act, offering benefits to the unemployed and elderly.
  • The New Deal ended in 1939 with the start of World War II, which kickstarted economic growth.

Post-WWII Boom (1945-73)

  • The USA experienced a significant economic boom after WWII due to factors such as a large and growing labour force, advances in technology and strong consumer demand.
  • The marriage and birth rates increased substantially, leading to the generation known as the ‘Baby Boomers’.
  • Niche markets such as teens and suburbanites emerged, driving consumption and economic growth.
  • The 1960s witnessed an increase in government spending due to the fame of Great Society social programs and the costs of the Vietnam War.

Stagflation and Recovery (1973-2000)

  • Stagflation, a combination of economic stagnation and inflation, marked the 1970s.
  • Causes included the result of rising oil prices due to the OPEC embargo, manufacturing competition from countries like Japan and Germany, and significant government spending.
  • The economic policies of presidents like Reagan in the 1980s focused on deregulation, tax cuts, and reduced government spending to boost the economy.
  • By the 1990s, the economy entered a period of prosperous expansion, culminating in the longest period of peacetime economic expansion in the country’s history.