Great Depression: causes, transmission, and effects

Definition and global scope of the Great Depression

The Great Depression was a severe worldwide economic downturn lasting from 1929 to 1939. It began with the 1929 Wall Street crash in the United States and then spread internationally, becoming a global “economic contagion.” The period was marked by very high unemployment and poverty, sharp declines in industrial production and international trade, and widespread failures of banks and businesses. At the start of the crisis, optimism initially persisted even after the stock market crash, but spending and investment weakened as consumers cut expenditures and deflationary pressures emerged. By 1933, the U.S. unemployment rate had risen to about 25%, many banks had failed, and the downturn had become deeply entrenched. Globally, recovery differed by country: some economies began improving by the mid-1930s, while others did not return to earlier growth rates until later in the decade. The Depression affected both wealthy and poor countries through falling personal incomes, deflation (falling prices), reduced tax revenues and profits, and large drops in trade, with unemployment in some places reaching extremely high levels.

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Roaring Twenties context before the crisis

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