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
it’s
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.