Effects of Economic Crises on Consumer Spending

Abstract

The Wall Street Crash of 1929 and the Great Depression following threw the United States and the rest of the world into an economic crisis. Through the policies of the New Deal and economic initiatives worldwide, the world was able to largely recover from the Great Depression. However, consumer behavior in the retail and wholesale sectors worldwide changed drastically as a result of the catastrophic increase in deflation. The author combined data on deflation growth with the decline in consumer spending and the decline in personal income per capita to obtain a correlation coefficient and coefficient of determination using a linear regression model. The author then combined data on the decline in consumer spending and the decline in personal income per capita, obtaining a correlation coefficient and coefficient of determination to address other possible explanations for the decline in consumer expenditures.