“Why the Great Depression Was Great”

The end of World War I in the US brought drastic socioeconomic changes. America saw a change in its economic landscape in the form of the Industrial revolution, a global shift from agricultural and rural life to an increase in city population and factory jobs. The war effort led to a rise in the manufacturing sector of the economy that did not falter post war. America would also experience a Great Migration, of primarily African American laborers, from the rural south to large Northern cities beginning in the late 1800’s, lasting well into the 20th century. The US was not isolated from the world, however in regards to the Great Depression and economic crash of 1929. Economic historians, in their research, have concluded that “direct outgrowth of distortions in price mechanisms imposed by large firms, government, and labor unions” prolonged the Great Depression . Simply put, the economy could not recover in a state of rigid price and wage inflexibility imposed by larger, more powerful parties. The economy would see decreased employment in industries,which formerly provided employment for large portions of the labor force, as consumer consumption of these goods were lower than ever before. For example, the processed food sector of the economy represented 2.1% of the total real expenditures in the 1920’s, by the 30’s this number rose .4%, demonstrating an increase in consumption of luxury consumer goods. In contrast, the textile industry would see a decrease of 0.34%, as clothing, a necessity, was overlooked for other, more luxurious goods. The issue with this change in consumption is the limited employment size of these increasingly in demand sectors of the economy. This led to a structural unemployment issue, the labor force becoming increasingly more unemployed had no industry to turn to, as jobs were not as readily available and investors were not willing to stimulate the economy by producing more employment opportunities. The Great Depression represented a cycle of increased consumer demand in sectors not providing employment and employment opportunities decreasing overall.