1937 Recession

About 1937 Recession

A sharp economic downturn during the Great Depression, caused by premature fiscal tightening. President Roosevelt cut government spending and the Federal Reserve tightened monetary policy, fearing inflation. Industrial production fell 30 percent. Unemployment surged from 14 to 19 percent. The recession, called the Roosevelt Recession, demonstrated that the recovery from the Depression was fragile and that government support could not be withdrawn too quickly. It influenced Keynesian economics, which argued for continued government stimulus during economic weakness. The recession ended when spending resumed in 1938.