Edward Hugh has the charts to show that in at least some countries industrial production is falling off a cliff, just as it did in the Great Depression.
It certainly looks like he\’s got the goods there.
However, however, I think there\’s one thing that\’s being missed here. The structure of the economy.
No, I\’m not going to run off and look up the figures, rather, I\’m just going to posit something.
Depending upon which country you were in in the 1930s agriculture was anything from 10-40% of the economy, yes?
Services were a small fraction and no, as I say, I\’m not going to look up the numbers. The rest, ie the bulk, of the economy was in manufacturing/industry (those aren\’t exactly the same thing but good enough for my purposes).
OK, today, in the advanced economies, agriculture is what, 1 or 2% of the economy? Manufacturing/industry is some 16% or so in the UK? 17, 18% in the US? Higher in Germany, sure, but it\’s still a lot less than 50%, isn\’t it? (Please, please, note that these numbers are all dimly remembered and are for expository purposes only).
All I really want to point out is that using industrial output as our measure of whether this is the Great Depression II doesn\’t really work: for industrial output is a much smaller share of our economy than it was last time around.
A 20% collapse in that 60% of the economy (say) that is manufacturing/industry in 1931 is different from a 20% collapse in that 16% of the economy that is manufacturing/industry in 2008.
Of course, this point doesn\’t mean that this isn\’t the GD II. Just that for us to have a 20% overall fall in the economy we need to see services, the major part of the economy now, showing the same sorts of falls that manufacturing/industry did last time around.
It might indeed be happening but industrial production figures don\’t show us that.