Success or Failure?

The Depression was so unusual, in every way, that it has prompted endless debate. Did the New Deal really help? If so, why did it take so long, and why did unemployment persist so long after the rebound was clearly underway?

Some believe that the government should never attempt to relieve individual hardship, as it leads to dependence. Others argue that Roosevelt just didn't go far enough. He didn't go big enough to achieve convincing success.

There's no way to settle the issue, but there's plenty of evidence to sift through. Clearly, 1933 was the big year of turnaround. America hit rock bottom just as Roosevelt was taking office, and began recovering soon after.
New-Deal spending, 1930s

  Trying Everything
No previous President had attempted to harness the federal government as an engine of economic recovery. An argument can be made that Roosevelt could have stopped after halting the banking crisis. Once banks stopped failing, perhaps the recovery would have followed naturally, without further stimulus. Today, most economists argue for prompt and aggressive stimulus.

New Deal economic Recovery, 1930s

  The Long View
Clearly, 1933 is the turning point, while GDP, the broadest measure of national economic health, has almost fully recovered by 1939 (top left). Other measures are slower to recover, especially unemployment (lower left). Trade with Europe is the perhaps the biggest laggard (lower right).  This may be related to very high tariffs, which America passed in 1930 to discourage competition from imports. European nations, however, are also still mired in a lasting Depression.


New Deal manufacturing rebound, 1930s

  Business is Back
The strongest rebound is in manufacturing, which suffered the steepest declines early in the Depression. Machinery and equipment sales have recovered 90% by 1937 (lower left), while sales of home appliances zoom to levels roughly double pre-crash levels (center bottom). Somewhat surprisingly, auto sales are still down by nearly 20%, while spending on other forms of transportation are up smartly (lower right). The economy actually enters another mini-slump in 1937, but recovers again by 1939.