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What Was Bad for General Motors Was Bad for America: The Automobile Industry and the 1937/38 Recession

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  • Hausman, Joshua K.

Abstract

This article shows that there were timing, geographic, and sectoral anomalies in the 1937/38 recession, none of which are easily explained by aggregate shocks. I argue that an auto industry supply shock contributed both to the recession's anomalies and to its severity. Labor-strife-induced wage increases and an increase in raw material costs led auto manufacturers to raise prices in fall 1937. Expectations of these price increases brought auto sales forward. When auto prices finally rose, sales plummeted. This shock likely reduced 1938 auto sales by roughly 600,000 units and 1938 GDP growth by 0.5–1 percentage point.

Suggested Citation

  • Hausman, Joshua K., 2016. "What Was Bad for General Motors Was Bad for America: The Automobile Industry and the 1937/38 Recession," The Journal of Economic History, Cambridge University Press, vol. 76(2), pages 427-477, June.
    • Handle: RePEc:cup:jechis:v:76:y:2016:i:02:p:427-477_00
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    Cited by:

    1. Christopher E. Boehm, 2016. "Government Spending and Durable Goods," CESifo Working Paper Series 6244, CESifo.
    2. Gabriel Mathy & Christian Roatta, 2018. "Forecasting the 1937-1938 Recession: Quantifying Contemporary Newspaper Forecasts," Working Papers 2018-004, The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting.
    3. Mary A. O'Sullivan, 2022. "History as heresy: Unlearning the lessons of economic orthodoxy," Economic History Review, Economic History Society, vol. 75(2), pages 297-335, May.

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