The Great Depression was an economic downturn of unprecedented proportions

Topics: Wall Street Crash of 1929, Great Depression, Federal Reserve System Pages: 2 (756 words) Published: March 8, 2015
The Great Depression was an economic downturn of unprecedented proportions. The stock market crashed, unemployment soared, banks closed their doors, spending.

The Great Depression was an economic event of unprecedented dimensions. There had been no downturn of its magnitude or duration before, and there has been none of its like since. Gross domestic product fell by 27 percent from 1929 to 1933. Simultaneously, prices fell about one-quarter. Gross investment fell by 98 percent. “The impact of this depression was not confined to the United States, although it took the brunt of the effects” (“Great Depression,” 2005). Trade also dropped with an even greater magnitude (“Great Depression,” 2005). Most explanations with regard to the causes of the Great Depression point to weaknesses in credit markets, both internationally and within the United States. Many also argue that the U.S. economy had become too productive. “Rapid technological gains, because of innovations such as electricity and the internal combustion engine, had brought unprecedented productivity gains in agriculture and industry during the 1920s. It has been said that the gains made the economy so productive that consumers could not purchase at that rate of production, which resulted in unsold inventory and widespread layoffs” (“Great Depression,” 2005). It is, however, important to note that in later history, it has been seen that production increases have almost always been accompanied by increased demand by consumers. The stock market crash also contributed to this decline. Stock prices kept an upward trend between 1926 to September 1929 . It then took a downward spiral with a loss of 36 % in value in the following year. (“Great Depression,” 2005).

Declines in consumer spending in 1930 significantly impacted the economy. American households shouldered a large amount of debt during this time, which also doubled as a second income. Much of this included revolving credit tied...
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