Interesting Comparison To The Great Depression

Interesting Comparison To The Great Depression

This website by a couple of economists claims that the current economic disaster is actually worse than the Great Depression in terms of the decline in industrial production. I find myself wondering how much of the dramatic decline, however, reflects that industrial production at our peak was so much higher than it was before the Great Depression. The good news:

What do the new data tell us?

• Global industrial production now shows clear signs of recovering.

This is a sharp divergence from experience in the Great Depression, when the decline in industrial production continued fully for three years. The question now is whether final demand for this increased production will materialise or whether consumer spending, especially in the US, will remain weak, causing the increase in production to go into inventories, leading firms to cut back subsequently, and resulting in a double dip recession.

• Global stock markets have mounted a sharp recovery since the beginning of the year. Nonetheless, the proportionate decline in stock market wealth remains even greater than at the comparable stage of the Great Depression.

• The downward spiral in global trade volumes has abated, and the most recent month for which we have data (June) shows a modest uptick. Nonetheless, the collapse of global trade, even now, remains dramatic by the standards of the Great Depression.

I have a job interview tomorrow morning, and I actually have resumes into companies here in Boise that are advertising positions that are a very close match for my experience! This is encouraging.