The Great Recession

Business Sales to Inventory Ratio Rises, Manufacturing Sales Decline -1.1% for June 2012

The Manufacturing and Trade Sales and Inventories report shows a -1.1% decrease in sales and an +0.1% increase in inventories for June 2012. Sales declined -1.1% for manufacturers, -0.8% for retailers and -1.4% for wholesalers. This is the 3rd month in a row for declining sales and this is the largest monthly percentage decrease since March 2009.

 

Not ready for prime time: Some ideas on the relationship between gold and depressions

Barry Eichengreen and Kevin H. O’Rourke have been updating us on the progress of this depression by comparing it to the big one, The Great Depression. Their original post, in April 6, 2009, captivated their audience.

One thing that struck me was that we might compare the two events to the totally overlooked depression of the 1970s – The Great Stagflation. The reason why this one is missing and, perhaps, lost from official economic history is that it did not look anything like how we expect a depression to look – at least by the accepted, albeit vague, standard of what constitutes a depression. For instance, as shown in the graph below, year over year Gross Domestic Product enjoyed an unbroken expansion during the entire period.

 

USGDPYOY - 1970-1980.jpg

Chart 1 (Source: Bureau of Economic Analysis)

Compare this performance to the contraction of GDP during the Great Depression

 

 USGDPYOY%20-%201929-1933.jpg

Chart 2 (Source: Bureau of Economic Analysis)