The spending for all the weapons and supplies used in WWII nominally got us out of the depression (if we where not out already, the growth started before we got in to WWII), by "nominally" I mean it caused recorded production/GDP/GNP to go up. And it wasn't fake production, actual items where produced, but I'd still say its only nominal for the most part because actual economic well being wasn't increased by that spending. The spending just shifted money and resources out of the civilian economy to military uses. We could have a similar effect by paying trillions to build copies of the great pyramid all over the us, something would be produced, people would be employed in doing it, but we wouldn't be increasing the economic welfare of Americans. The use of resources for the war led to shortages. That could have been dealt with by letting the prices of the goods rise, that would have increased recorded inflation, and thus reduced the recorded GDP growth. That would have given a more honest picture of the economy, but such an honest picture would have been less politically advantageous. Also the government hardly wanted to have to pay more for its equipment, so instead of paying more for the goods, they imposed rationing (with the government of course immune to the limitations), reducing non-government demand, so the extra government demand could be more easily met, and met with less government spending.
Some things related to WWII did help us climb out of the depression. One was the purchase of American goods by other countries before we got in to the war. (Of course the foreign currency only really helps, at least over more than the short run, if we can eventually buy something with it, and we shifted more to "lend-lease" from sales over time, so there was some limit to this benefit). Another reason was the removal of some of the limitations and economic experiments imposed by the government during the depression (there where some new ones, most notably rationing, but at least we no longer had constantly shifting economic experimentation and central control being pushed by FDR.
But perhaps the main reason we got out of the recession was the simple passage of time, combined with the adjustments people made to change production to meet different types of demand, to no longer have to struggle to pay down debt, since the debt levels had become low, etc. Recessions or depressions don't last forever, esp. not if the government isn't pushing policies that keep them in place. |
