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.