Thursday, April 16, 2009

Comparing depressions

Today's economic slowdown is often compared to the great Depression of the 1930s. How close are we to repeating that terrible period?

Judging by US industrial production data, today's recession is considerably more milder than the one that preceded the Wall Street crash of 1929. After 20 months of this crisis, US industrial production is down about 12 percent. Over the same time period during the great Depression, industrial production fell by a quarter.


  1. I wonder what the comparision would look like if you started from the Lehmans collapse rather than the summer of 2007?

  2. Um, that's because you're not comparing like with like. It's the alpha creditor / alpha producer that suffers a wipeout in industrial production. In 1929 that was the US. In 2007 it was China, Japan, Germany and the BRICs.

  3. Depends what the stats take into account. The US does not have the same industrial base that it did in the 20's and 30's. You have to be careful with stats (more service economies now).

    Compare with China as Nick Von Mises states (Name influenced by the great ludwig von mises?)

  4. Here's the comparison graph you should be looking at Alice:

    We are so fucked it's not even funny anymore :-((

  5. Heavens Alice, I'm beginning to think you are becoming a optimist!

    Take into account the manipulation of the inflation figures that form part of real GDP calculations and you'll see that those two lines get a little closer.

    I suspect anyway that the recent GDP line is real while the 20's one is definitely nominal, either that or they are both nominal, thus the deflationary effects of the '29 depression haven't been included. In any event GDP is calculated quite differently now than it was then...

    You know the doom as well as we, such chart-ism should not convince you out of it :P

  6. Did the government bail out banks and print money in 1929?