In a recent article titled ‘Charting the current US downturn’ Brad Setser reports that Paul Swartz of The Council on Foreign Relations Center for Geoeconomic Studies has been tracking how the current US downturn stacks up against the typical post-War War 2 downturn, and that what this shows is:

• the fall in US industrial production already exceeds the typical fall in a recent downturn, and looks set to exceed the worst fall in the post Word War 2 data;

• best as can be interpreted, the fall in US industrial production now isn’t quite as bad as in the 1930s; and,

• the US isn’t making the same macroeconomic errors as is it made in the downturn than became the Great Depression. The US, for example, has implemented a large fiscal expansion to support demand far faster now than back then. That said, Swartz’s research leaves little doubt that the current downturn is — on nearly every measure — as bad as any downturn since the Depression.

I suggest readers click through to Setzer’s article and review the charts, data and commentary shown there. I continue to think that unless the continuing loss of U.S. manufacturing jobs is contained and reversed that the U.S. (and we in Ontario in so far as our manufacturing base is concerned) slide further and further down a slippery slope that will lead to ‘lifestyle declines’ – something no one wants, and will be unhappy to accept.

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