In the summer of 1929, industrial production declined, and unemployment rose, leaving stock prices much higher than their actual value. In addition, wages were low and consumer debt as high. Because of drought and falling food prices, farmers were struggling. Finally, banks were unable to liquidate many of their larger loans.
As a result, the American economy entered a mild recession. Consumer spending slowed; unsold goods began to accumulate. Despite this recession, stock prices continued to rise to levels well above expected future earnings. All of this came to a head in October 1929. The time of prosperity, dubbed the Roaring Twenties, was brought to a screeching halt when the U.S. stock market crashed, wiping out fortunes and plunging the United States (and the rest of the world) into an economic depression. For the next ten years, the Great Depression impacted people all over America, leaving many destitute.
Then, starting in 1930, farmers in the Midwest and Southern Great Plains watched as their crops were destroyed by longtime drought. Massive dust storms began about a year later. By 1934, about 35 million acres of formerly cultivated land was rendered useless for farming, while another 125 million acres was slowly being stripped of its nutrient-rich soil. Although regular rainfall returned to the region by the end of 1939, thereby ending the Dust Bowl, the agricultural value of the land did not recover, forcing many farmers to leave their livelihood.
The Great Depression effectively came to an end on 7 December 1941, when the United States entered the Second World War. Almost overnight, production for the war effort began to boom, increasing industrial output by 96 percent. Approximately 17 million new civilian jobs were created.