The economic downturn that began in mid 1937 had ballooned unemployment from 14 percent in 1937 to 20 percent in 1938. In the spring President Roosevelt
proposed a new $5 billion program of government spending to reverse the decline. The recession bottomed out at that moment and output increased 58 percent by 1940. He also appointed Thurman Arnold
as Assistant Attorney General in charge of the anti-trust division of the Justice Department on the theory that the Great Depression was a consequence of monopoly power. A Civil Aeronautics Act
established the Civil Aeronautics Authority with the power to regulate airline routes and fares. In June the Congress passed and the president signed the Fair Labor Standards Act
of 1938 that established a minimum wage of 40 cents an hour, a forty hour week, and time-and-a-half for overtime, and banned most employment of children.
In the off-year elections of the Roosevelt second term the president's party suffered its first losses since 1928. In the Senate elections the Democrats lost 6 seats to the Republicans. In the House elections the Democrats lost 72 seats, the Republicans gained 81 seats, and the Progressive Party lost 6 seats. In the 76th Congress the Democrats maintained a commanding 68-23 majority in the Senate and a substantial 262-169 majority in the House.