The Great Depression: Economic Indicators

Figure 1.--Liberal Democrats promote the idea that narative that the Federal Government solved an economic crisis created by capitalism. This simply is not accurate. Unemployment was reduced fir several years, but by 1939 when this family was photiographed, the unemoployment rate was back up to 19 percent and this did not measure the many workers who had simply dropped out of the job market. Unemploymenbt did begin declining in 1839, but not because of New Deal priograms. It was because American factiories began to get war orders from Eurooe and defense orders from the Federal Government. We still see the same tragic scenes in 1939 that we saw at he time President Roosevelt took office. This migrant family was photographed in Welasco, Texas during 1939.

Assessments of the New Deal often are largely ideological in nature and thus are excahanges of opinion which commonly lead nowhere. Thus it is important to at least look at the available statistical data. The New Deal eventually took on a wide range of problems, but President Roosevelt was elected with one primary mandate--to end the Depression. So there are many statistical indicators that can be used to assess that basic question -- did the New Deal end the Depression? There are a range of economic indicators that are used to monitor business cycles, including business activity like steel or cement production, housing starts, tax receipts, unemployment claims, and much more. Some such as unemployment claims did not exist in he 1930s, but many data sets can be used. The single most important measure for most Americans was unemployment. And the available data clearly show that the New Deal did not significantly reduce unemployment: 1928 (4.2 percent), 1930 (8.7 percent), 1932 (23.6 percent), 1934 (21.7 percent), 1936 (16.9 percent), 1938 (19.0 percent), 1940 (14.6 percent), and 1942 (4.7 percent). [Bureau of Labor Statistics] This data shows that the New Deal did reduce unemployment to an extent, but not to normal levels, but unemployment began to increase again with the Roosevelt Recssion (1938). And the 19 percent reported in 1938 is misleading. It was sctually much higher as not counted are those who had given up looking for work and had dropped out of the job market. Only with World War II did unemploment return to normal levels. Now this is only one data set, but other economic indicators tell much the same story. The clear conclussion is what ever the New Deal did or did not do, and there were important achievements, it did not end the Depression. This is important, because Liberal Democrats today pursue the narative that the Federal Government solved an economic crisis created by capitalism. This simply not accurate. As President Roosevelt's Treasury Secretary and close associate, Henry Morgenthau, admitted. "We’re spending more than ever and it doesn’t work. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot!" [Morgenthau. Testimony]

Sources

Bureau of Labor Statistics. U.S. Department of Labor.

Morgenthau, Henry. Testimony before the House Ways and Means Committee (May 9, 1939).

Created: 12:30 AM 8/13/2018
Last updated: 12:30 AM 8/13/2018