Underlying U.S. Economic Weaknesses

Under-Consumption & Market Saturation

• 71% of Americans​ earned below ​​$2,500/year, lacking the purchasing power for new consumer goods.

• Key markets became ​saturated. Car sales fell by ​one-third in 1929; construction spending dropped by ​​$2 billion since 1926.

Agricultural Crisis

• Farm incomes fell from ​​6 billion(1929) to 2 billion (1932)​.

• Agricultural prices fell ​60% below their 1929 level.

• ​One-third of American farmers lost their land.

• Environmental disaster: Severe ​droughts (1930-31)​​ and ​dust storms (from 1932)​​ made land unusable.

Weak Banking system

• Only ​one-third​ of banks were in the Federal Reserve System; regulations varied by state.

• Even before 1929, ​5,172 banks (~20% of the total)​​ had failed.

• Banks had ​limited cash reserves, making them vulnerable to "​runs."

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