How did the New Deal affect the economy?

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mkoren | Middle School Teacher | (Level 3) Senior Educator

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The New Deal greatly affected our economy. When President Roosevelt took office, 25% of our population was unemployed. Businesses were closing and banks were failing. People felt hopeless and helpless. The economy was in disarray.

As a result of the New Deal, things got better. More people began working due to various New Deal job creation programs. Banks were made safer as only the strongest banks were allowed to reopen after the bank holiday was declared. Farmers were helped with the passage of the Agricultural Adjustment Act. People began to feel better about our economic situation.

However, the New Deal didn’t eliminate our economic problems. Despite all of the spending, we still had a lot of unemployed people. When President Roosevelt tried to reduce government spending, our economy slipped back into a recession. We went into debt to pay for all of these programs. Thus, while the New Deal did improve things, it didn’t end our economic problems. It took World War II to get us out of the Great Depression.

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