An interesting chart puts a stark focus on our currrent downturn. It’s one of the worst we’ve experienced since 1947, but it’s still a far cry from the decline in consumption and output that we experienced in the Great Depression.
Two things strike me. First, that’s an incredibly long time, 1929 to 1933: the downturn was grueling and relentless. We’re just a couple of years into our decline, and you can see in the upturn in consumer sentiment that no one likes feeling this down this long. If we take another leg down, rather than work our way into a slow recovery, then we’re going to see a lot of drawn faces.
A second thought is that what is different today from any other downturn since 1947, and what is more similar than not to the Great Depression, is that the economic engine that just ran out isn’t going to rev back up to the same speeds. Our economy is going to need new engines for growth, in order to give consumers a long stretch to right their balance sheets and recover for the huge drop in home values.
So when we look out ahead, we don’t know exactly what is going to drive new growth. That’s a different feeling than any we’ve experienced in the last 60 years.
Two things strike me. First, that’s an incredibly long time, 1929 to 1933: the downturn was grueling and relentless. We’re just a couple of years into our decline, and you can see in the upturn in consumer sentiment that no one likes feeling this down this long. If we take another leg down, rather than work our way into a slow recovery, then we’re going to see a lot of drawn faces.
A second thought is that what is different today from any other downturn since 1947, and what is more similar than not to the Great Depression, is that the economic engine that just ran out isn’t going to rev back up to the same speeds. Our economy is going to need new engines for growth, in order to give consumers a long stretch to right their balance sheets and recover for the huge drop in home values.
So when we look out ahead, we don’t know exactly what is going to drive new growth. That’s a different feeling than any we’ve experienced in the last 60 years.
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