The unemployment rate was 4.2% in 1928, the final year of the Roaring Twenties. That is lower than the natural unemployment rate. It more than doubled to 8.7% by 1930. It had grown to 23.6% by 1932. It rose to a peak of almost 25% in 1933. There were about 15 million unemployed people. The unemployment rate at that time was the highest ever noted in America.
During the Depression, a third of the nation's banks failed. By 1933, 4,000 banks had failed. As a result, depositors lost $140 billion.
90% of the value of the stock market was lost between 1929 and 1932. 18 It took 25 years for it to recover. People no longer have any faith in the Wall Street markets. Banks, companies, and individual investors all went bankrupt. Even non-investors suffered losses. The funds from their savings accounts were by their banks.
Countries built trade barriers to safeguard domestic industry as their economies deteriorated. In an effort to safeguard American jobs, Congress passed the Smoot-Hawley tariffs in 1930.
Other retaliated. As a result, trade currencies and national alliances were used to form trading blocs. 19 Between 1929 and 1934, world trade fell by 66% (measured in dollars). 20 It had not yet reached its 1929 level by 1939.
Between 1930 and 1932, prices decreased by 30%. 22 Although deflation benefited consumers whose incomes had decreased, farmers, businesses, and homeowners were negatively impacted because mortgage payments had not decreased by 30%. As a result, many people had mortgage defaults. Homeowners who lost everything became migrant workers who sought employment wherever they could.
What is the great depression?
Between 1929 and 1939, there was a global economic crisis known as the Great Depression. After a significant decline in American stock prices, the Depression became clearly visible. The Wall Street stock market crash of October 24 was caused by an economic contagion that started around September 1929.
Hence, the five effects of the great depression are unemployment, stock, deflation, trade, and banking.
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