Roosevelt Recession

Definition

The Roosevelt Recession was a brief economic downturn that occurred in the United States in 1937-38, during the later years of the Great Depression. It happened after President Franklin D. Roosevelt cut federal spending to balance the budget.

Analogy

Think of the economy as a sick patient and government spending as medicine. When FDR reduced government spending (or took away some of the medicine), it caused a relapse in the economy's health, leading to another downturn or "recession."

Related terms

New Deal: A series of programs and projects instituted during the Great Depression by President Franklin D. Roosevelt that aimed to restore prosperity to Americans.

Fiscal Policy: Government policy that attempts to manage the economy by controlling taxing and spending.

Deficit Spending: The amount by which a government's expenditures exceed its tax revenues.