ECONOMIC TIMELINE of the Great Depression

The following timeline shows the order of economic events during
the Great Depression. Notice the effect that deficit spending had on
economic growth:

Receipts: Tax receipts as a percentage of the Gross Domestic Product

Spending: Federal spending as a percentage of the Gross Domestic Product

GNP: Percent change in the Gross National Product

Unemp.: Unemployment rate

 

       Tax       Federal    GNP       Unemp.
Year   Receipts  Spending   Growth    Rate
-------------------------------------------------
1929      --       --         --      3.2%  < Hoover era, Great Depression begins
1930     4.2%     3.4%     - 9.4%     8.7
1931     3.7      4.3      - 8.5     15.9
1932     2.9      7.0      -13.4     23.6
1933     3.5      8.1      - 2.1     24.9   < FDR, New Deal begins; contraction ends March
1934     4.9     10.8      + 7.7     21.7
1935     5.3      9.3      + 8.1     20.1
1936     5.1     10.6      +14.1     16.9
1937     6.2      8.7      + 5.0     14.3   < recession begins, May
1938     7.7      7.8      - 4.5     19.0   < recession ends, June
1939     7.2     10.4      + 7.9     17.2
1940     6.9      9.9  
1941     7.7     12.1  
1942    10.3     24.8   
1943    13.7     44.8   
1944    21.7     45.3   
1945    21.3     43.7

As you can see, Roosevelt began relatively modest deficit spending that arrested
 the slide of the economy and resulted in some astonishing growth numbers.
(Roosevelt's average growth of 5.2 percent during the Great Depression is even
higher than Reagan's 3.7 percent growth during his so-called "Seven Fat Years!")
When 1936 saw a phenomenal record of 14 percent growth, Roosevelt eased back
 on the deficit spending, overly worried about balancing the budget. But this only
caused the economy to slip back into a recession, as the above chart shows.

I have been unable to find reliable economic growth figures from World War II,
but as a generalization it is safe to say the economy exploded, experiencing itís
greatest growth in U.S. history. Between 1940 and 1945, the GDP nearly doubled
in size, from $832 billion to $1,559 billion in constant 87 dollars. And this
 occurred as deficit spending soared, to levels Keynes had earlier and
unsuccessfully recommended to Roosevelt.