The boom was essentially based on the consumer economy
But wealth was unevenly distributed – in 1929 about 5% of the population was receiving 33% of the income
Most of Americans were living on or below the poverty line and by 1929, the rich and middle class had bought their consumer goods; consequently, sales began to fall
The market was rapidly becoming saturated with goods that either people couldn’t afford or else had already bought
There was a downturn in construction too
Increased mechanisation caused the production of too many goods for the home market
Exports reduced when foreign countries retaliated because America had put up tariff barriers to protect their own industries from foreign imports
Europe was also still recovering from the war
Consequently, there was overproduction in both agriculture and industry
Farming struggled against the competition of the highly efficient Canadian wheat producers too
Coal and traditional industries like textiles were in decline
Another problem was that the economy had become riddled with debt: banking debts, corporate debts and personal debt