Final answer:
The true statement about the 1937 recession is that it gave critics of the New Deal proof of its shortcomings, as unemployment rose sharply to 18%. Roosevelt reversed spending cuts and increased federal funding for relief programs, preventing another economic downturn.
Step-by-step explanation:
The statement that is true about the 1937 recession and its impact on Roosevelt and the New Deal is that the recession provided ammunition to critics of the New Deal as unemployment soared to 18%. Despite early successes in the New Deal that had seen unemployment fall, the decision to cut federal spending in 1937 led to a sharp downturn in the economy, a phenomenon that caught the Roosevelt administration by surprise and led to rapid increases in unemployment and declines in industrial production. Many of Roosevelt’s advisers, along with the lessons learned from British economist John Maynard Keynes, convinced the President to reverse course and increase spending once more, which prevented further economic disaster.
Secretary of the Treasury Henry Morgenthau Jr., with his strong views on balancing the budget, was critical during this period, maintaining that the downturn was due to low investor confidence because of growing national debt and inflationary policies. However, most of Roosevelt's advisers argued that New Deal programs such as the WPA were effective, countering that budget deficits were a lesser issue compared to the extended depression. This led to the acknowledgment of the importance of federal relief spending in maintaining employment and consumer spending, prompting a renewed commitment to such policies in 1938.