why the New Deal and WW II didn't fix the macro-economy

Excerpts from a really nice academic article by Robert Higgs in The Independent Review, entitled "A Revealing Window on the U.S. Economy in Depression and War" and focused on the subtitle, "Hours Worked, 1929–1950"...

Economists and economic historians have assessed the economy’s condition during these momentous years primarily with reference to the usual macroeconomic indicators, especially the real gross domestic product (GDP) and the rate of unemployment....The war period, in contrast, stands out in the standard statistical series as a time when real GDP appeared to increase phenomenally and the rate of unemployment fell almost to zero.

Interpretation of economic events in the light of such conventional measures has been complicated, however, by institutional peculiarities unique to these extraordinary times. Both real GDP and the rate of unemployment are difficult to interpret in the usual way, the former because of the operation of a wartime command economy, complete with comprehensive price controls and a multitude of other significant departures from market pricing and resource allocation, and the latter because of large-scale, atypical forms of government employment, especially the emergency work-relief programs during the Depression and the military conscription of labor during the war....

I examine here what we can learn by focusing on a different, seldom-considered measure--namely, employment of labor as measured by hours worked. This alternative way of looking at the economy’s operation helps us to avoid a number of difficulties...

Total hours worked fell substantially from 1929 to 1932. Then, unlike the standard depiction of the economy’s course, they hit bottom and stayed put in a virtually flat-bottomed trough for three years, 1932, 1933, and 1934. They then rose substantially until 1937, dropped by 7 percent in 1938, then rose again there-after. However, even as late as 1940, total hours remained below the 1929 level by 6 percent, and only in 1941, with the population vigorously engaged in mobilization for war, did total hours exceed the 1929 value, by 3 percent. Meanwhile, of course, the population and the potential labor force had grown substantially...something less than a complete triumph.

Total hours worked increased rapidly from 1940, when in the latter half of the year the United States began to mobilize for war, until they reached a peak in 1944....Government civilian hours and farm hours varied within a relatively narrow range in the 1940s, which means that the large variations in total hours during this decade may be traced for the most part to variations in military hours and private non-farm hours...

The tremendous mismatch between the increase in private hours worked and the estimated increase in real GDP from 1940 to 1944 calls into serious question the accuracy of the estimated increase in real output....