The Recession Nobody Talks About
Part of New Deal Success or Failure — GCSE History
This introduction covers The Recession Nobody Talks About within New Deal Success or Failure for GCSE History. Revise New Deal Success or Failure in America 1920-1973 for GCSE History with 10 exam-style questions and 4 flashcards. This is a high-frequency topic, so it is worth revising until the explanation feels precise and repeatable. It is section 1 of 11 in this topic. Use this introduction to connect the idea to the wider topic before moving on to questions and flashcards.
Topic position
Section 1 of 11
Practice
10 questions
Recall
4 flashcards
📖 The Recession Nobody Talks About
By the summer of 1937, Franklin Roosevelt was convinced he had won. Unemployment had fallen from 25% to 14%. Farm incomes were up. The banking system had stabilised. Industrial output was rising. It was time, FDR believed, to balance the budget — to prove the New Deal had worked and that the federal government could now step back.
He was catastrophically wrong. By the autumn of 1937, unemployment had jumped back to 19%. Industrial production fell 33% in just a few months. Americans called it the "Roosevelt Recession" — and they blamed FDR directly. What had happened? The New Deal's job creation had been funded by government spending. When FDR cut that spending, the recovery collapsed, revealing that the economy still had no independent foundation. It was still entirely dependent on federal money.
The Roosevelt Recession of 1937-38 is the most important piece of evidence in any debate about whether the New Deal succeeded or failed. It proved that unemployment in 1937 was the product of government spending, not genuine recovery — and that only continued, massive spending could keep unemployment down. That spending would come, but not from the New Deal. It would come from World War Two.