How did World War 2 affect the economy during the Great Depression?

America’s involvement in World War II had a significant impact on the economy and workforce of the United States. Our involvement in the war soon changed that rate. American factories were retooled to produce goods to support the war effort and almost overnight the unemployment rate dropped to around 10%.Click to see full answer. In this manner, how did World War 2 affect the Great Depression?A common fallacy is that the Great Depression was ended by the explosive spending of World War II. The Depression was actually ended, and prosperity restored, by the sharp reductions in spending, taxes and regulation at the end of World War II, exactly contrary to the analysis of Keynesian so-called economists.Secondly, how did the Great Depression start World War 2? The Japanese attack on Pearl Harbor in December 1941 led to America’s entry into World War II, and the nation’s factories went back in full production mode. This expanding industrial production, as well as widespread conscription beginning in 1942, reduced the unemployment rate to below its pre-Depression level. One may also ask, how did the Great Depression affect the economy? Economic impact. The most devastating impact of the Great Depression was human suffering. In a short period of time, world output and standards of living dropped precipitously. As much as one-fourth of the labour force in industrialized countries was unable to find work in the early 1930s.Did WWI Cause the Great Depression?The lingering effects of World War I (1914-1918) caused economic problems in many countries, as Europe struggled to pay war debts and reparations. These problems contributed to the crisis that began the Great Depression. It was the worst economic disaster in American history.