The soaring stock market became a symbol of prosperity, seeming to signify the capacity of the American economy for production of wealth. Though limited by today's standards, the number of Americans drawn into the stock market grew quickly and was far greater by the late 1920's than ever before. Because of this, when the crash came, it had a stunning impact on the confidence of consumers and investors. This worsened the economic downturn, which became more visible in the months after the collapse of the market. Contemporaries in fact tended to blame the depression mainly on the market crash, but here they exaggerated. (Himmelberg, 7) The stock market crash signaled the end to an era. It emptied out the savings and confidence of many Americans, but it alone did not explain the failure of the American economy. The economy actually peaked during the second quarter of 1929, well before the crash, and the reasons why the economy turned down so disastrously for many years in a row once the decline began go well beyond the markets influence. (Himmelberg, 7).
The downturn of 1929 becoming a severe depression, let alone the beginning of a decade-long period of economic decline and stagnation, was not immediately apparent or even imagined by the direst Cassandras of 1929. (Himmelberg, 8) The most recent depression, after World War I, had been deep but short lived. The thinking from 1929 through much of 1930 was that this depression too would be brief, and to be grateful that the downward trend of the economy was so much more moderate than it had been during the previous episode of depression. (Himmelberg, 8) There also had developed a deeply engrained belief, especially in business circles, that the modern economy, with its immense production and consumption of so great a variety and volume of consumer goods, had become virtually depression-proof. (Himmelberg, 8).
Unemployment rose steadily throughout 1930; consumer spending and production of goods and services fell relentlessly, even though gradually; the stock market continued its decline; farm prices collapsed; and many banks, squeezed by the inability of borrowers to repay loans, approached the brink of failure.