DEFINITION of 'The New Deal'

The New Deal is a series of domestic programs designed to help the United States economy emerge from the Great Depression. It launched in the early 1930's, and was designed to bolster the United States economy, reduce unemployment, and instill confidence in the government’s ability to protect its citizens.


The stock market crash on October 29, 1929 – known as Black Tuesday – brought a period of roaring growth to a sudden halt. Companies and banks across the United States started failing, and the unemployment rate skyrocketed to the point that nearly a quarter of the workforce was unemployed.

Domestic Programs

President Franklin Roosevelt launched The New Deal after taking office in 1933. The New Deal consisted of a variety of government-funded programs aimed at getting people back to work, as well as legislation and executive orders that propped up farmers and stimulate business activity.

The New Deal is often broken into two segments. The “first” New Deal was launched during the first two years of the Roosevelt presidency, and focused on measures to stabilize the banking system (Emergency Banking Act), ensure bank deposit security (Banking Act of 1933), increase confidence in the stock market (Securities Act of 1933), as well as the more controversial National Recovery Administration, which was designed to set working conditions, minimum wages and maximum hours, and guarantee the right of labor to bargain collectively. The “second” New Deal introduced government-sponsored retirement plans (Social Security Act), increased government employment (Works Progress Administration), and minimum wages (Fair Labor Standards Act).

While The New Deal is credited with helping to end the Great Depression, it remains controversial in that it introduced a number of liberal reforms as well as an increasing government's role in guiding the economy. Several New Deal programs were ultimately declared unconstitutional, and Roosevelt threatened to increase the number of Supreme Court justices in order to prevent future programs from being shuttered.

For all the programs and policies enacted to get the economy moving again, historians are divided as to the effectiveness of the measures. The economy did slowly recover during the 1930s and confidence was restored to the banking system through federal deposit insurance. 

It was World War II, however, that provided the impetus to get America fully back to work as the so-called arsenal of democracy. The unprecedented spending worldwide on ships, arms and planes propelled America into full employment much more than any of the New Deal programs.

  1. Depression

    Depression refers to a period of sustained economy decline and ...
  2. Great Society

    Great Society was a set of programs created in the turbulent ...
  3. Social Security Act

    The Social Security Act is a law enacted in 1935 to create a ...
  4. Depressed

    Depressed is a state or condition of a market characterized by ...
  5. The Great Recession

    The Great Recession was the sharp decline in economic activity ...
  6. Capital Purchase Program - CPP

    A U.S. Treasury program designed to provide new capital to banks, ...
Related Articles
  1. Insights

    The Economic Effects of the New Deal

    Although the New Deal failed to revive the U.S. economy during the Great Depression, its legacy lives on today as increasing the social welfare of America.
  2. Insights

    Recessions and Depressions Aren't So Bad

    Downturns like depressions and recessions are a natural part of the economic cycle and can actually provide some benefits.
  3. Personal Finance

    Minimum Wage: Good Cause Or Economic Pariah?

    Here are some positives and negatives to help you decide where you stand on the minimum wage debate.
  4. Insights

    4 Government Interventions: Did They Work?

    President Obama isn't the first leader to step in the middle of a potential Federal crisis - how did the others fare?
  5. Personal Finance

    Financial Analyst Training & Designation Programs

    Find out how to upgrade your financial skills with a series of analyst designations that are flexible and adaptable to the ever-changing finance industry.
  6. Insights

    Can Keynesian Economics Reduce Boom-Bust Cycles?

    Learn about this famous British economist's proposed solution to a widespread economic problem.
  7. Trading

    When FDR Abandoned the Gold Standard

    Faced with a recession at home and international headwinds, FDR took on gold in a move to save the American economy
  8. Insights

    Country Risk: What Happens When A President Dies?

    The sudden death of a country's leader can have dramatic and far-reaching effects on both domestic and world economies.
  9. Insurance

    How To Apply For Unemployment Insurance

    Unemployment compensation is a federal program administered by each state. Here's how to connect to your state's unemployment office and what to expect.
  1. What macroeconomic problems do policy makers most commonly face?

    Learn about the macroeconomic factors policymakers have to be concerned with when deciding on economic policies, such as ... Read Answer >>
  2. How are investment banks regulated in the United States?

    Read about the extensive regulations placed on investment banks in the United States, beginning with the Glass-Steagall Act ... Read Answer >>
Hot Definitions
  1. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  2. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  3. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  4. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  5. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  6. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
Trading Center