Final answer:
The Great Depression led to soaring unemployment, widespread poverty, and economic collapse. Businesses laid off workers due to decreased purchasing power, leading to the creation of shantytowns and long breadlines, with a significant societal impact. The downturn in trade and recall of loans by U.S. banks also had a severe global effect.
Step-by-step explanation:
A direct result of the economic downturn during the Great Depression was the sharp increase in unemployment rates and widespread poverty. The damage to key industries, such as the automobile and construction sectors, led to businesses laying off workers and cutting wages, as consumers had less money to spend, and there was diminished demand for products. This led to a vicious cycle where decreased purchasing power further weakened businesses, causing a significant decline in the gross national product and a tripled unemployment rate from 1.5 million to 4.5 million in just one year.
The new reality for many Americans involved a loss of jobs and homes, with some communities witnessing long breadlines of unemployed individuals and growing shantytowns as symbols of the economic hardship. Homelessness, hunger, and an absence of social safety nets exacerbated the suffering during this time. The Great Depression also left long-lasting social and psychological effects, as many gave up on college, marriage, and even routine healthcare.
The worldwide impact included a 15 percent decrease in global GDP, causing an international trade downturn and prompting U.S. banks to recall foreign loans, leading to financial crises in other countries as well. The absence of effective government intervention in the early stages of the Great Depression and lack of social safety nets made the situation worse until the beginning of World War II ushered in an economic stimulus.