By 1929, there were many weaknesses in the American economy.
The economic boom was faltering. It was too heavily based on cars and consumer goods.
Overproduction and underconsumption were affecting most sectors of the economy.
Old industries were in decline.
Farm income fell from $22 billion in 1919 to $13 billion in 1929. Farmers' debts increased to $2 billion. Sharecroppers were often destitute when cotton crops failed or prices fell.
Wealth was very unequally divided in America. A third of all income was earned by just 5 per cent of people.
Wages did not increase as quickly as company profits, especially in the construction industry where there was only a 4 per cent increase in pay during the decade.
12 million Americans were below the poverty line. Hardest hit were immigrants and black Americans.
Working hours remained high.
Many people were in debt. 60 per cent of cars and 80 per cent of radios were bought on credit.
20 million people were involved in the buying and selling of shares in order to make a profit on the stock market. This is known as speculation and led to over-valued shares. Ordinary people were buying shares “on the margin”.