Barry and I provide a second update to our Vox piece here. The data are now through June 2009, and show clear signs of recovery. Good news then, although there are still plenty of question marks going forward, such as those raised here.
Kevin, considering the global response – QE, consumer incentives, etc. it is not surprising that there has been some turn around in the figures. Much of how this recession plays out depends on how sustainable current incentives are, and what effects their cessation will have.
The actions taken globally so far are generally to be applauded, but as to calling a turn around in the global economy, I am reminded of what (the original) Zhou Enlai said about the French Revolution, “it is too early to say”
I agree that caution is appropriate, Lorcan.
An excellent piece of research and well deserving of the massive viewing figures it received previously. But, given that it is part funded by the Irish taxpayer, it is a pity that Ireland wasn’t included as one of the four small European economies analysed. If it had been, the contrast between Ireland and the dozen or so countries, for which industrial output charts were given, would have been striking and would have helped to boost Ireland’s economic reputation, which is currently being unjustifiably savaged on a daily basis in the world’s media.
The charts show industrial output down massively in every country since April 2008 (the authors’ chosen base month). In most of them the fall is about 20 per cent. I am unable to display a chart as the authors of this report do. But, I have calculated the corresponding monthly industrial output indices for Ireland to base April 2008 = 100.0. The figures are as follows:
Apr 2008 100.0
May 2008 112.1
Jun 2008 108.7
Jul 2008 111.5
Aug 2008 114.4
Sep 2008 111.5
Oct 2008 104.6
Nov 2008 109.8
Dec 2008 99.7
Jan 2009 113.1
Feb 2009 104.4
Mar 2009 111.1
Apr 2009 105.9
May 2009 102.9
Jun 2009 113.3
It looks as though Ireland is the only developed country in which industrial output in June 2009 was higher than in April 2008. A 13.3 per cent rise in industrial output in Ireland between April 2008 and June 2009 would seem to compare quite favourably with the 20 per cent falls recorded in nearly every other country. No doubt when Michael Hennigan reads this, he’ll be posting to say that the rise in Ireland is all down to the chemicals sector. But, even if the chemicals sector is excluded, the trend for Ireland over the period covered would be more or less flat. Not as good as when chemicals are included (as, obviously, they should be), but still much better than the massive falls recorded in every other country.
Perhaps Ireland can be included next time?
It took the Dow 25 years to reclaim its 1929 peak:
The Dow peaked at 381.17 on Sept 3, 1929. It crashed on October 28 and 29, 1929, falling from 301 to 230 or 23.6%
One year after the peak, the Dow closed at 237.54, down 37.3% from its peak. It continued to slide until July 8, 1932 where it bottomed at 41.22, down 89.2% of its value over 2.5 years
The Dow did not cross above 381 again until Nov 23, 1954, over 25 years after its 1929 peak.
My job during the boom was to bring the über-optimists down to earth and I haven’t given up!
@Michael Hennigan.
The idea that Ireland’s massively superior performance in relation to industrial output during the current global recession is down to 15 firms is totally bonkers. As I’ve pointed out, even if the chemicals sector is excluded (and there is no reason why it should be), the fall in manufacturing output in Ireland during the current global recession is still much less than the 20% fall recorded in virtually every other developed country. And, if the chemicals secor is included, manufacturing output has actually risen in Ireland during the current global recession. If you bothered to check the figures, you’d find that manufacturing output in Ireland has been growing faster than in any other EU15 country for about 40 years and long predates your self-appointment to the job of doom-monger general.
@John: I’m sure you didn’t mean to imply that the direction of research should be influenced by the sources of funding, which would run counter to the principle of academic freedom.
No, I won’t be including Ireland next time around for the simple reason that I couldn’t find monthly Irish data beginning in 1929.
Kevin,
Great analysis, and invaluable as ever.
One interesting outcome of the collapse in world trade over the last year is that despite it being a huge wallop, the world trade rules system has remained more or less intact (would be interested if this is your take Kevin). An interesting dataset on the use of trade `remedy` policy instruments such as antidumping, safeguards, and countervailing duties (anti-subsidy policies) in response to domestic industry demands for protection from import competition is available from Chad Brown, link below. It shows that while there has been a significant up-tick in the use of these measures, the projected total for 2009 is still less than the far shallower 2002 economic decline.
@Ronnie: yes, this has been one of the positive features of the crisis thus far. Long may it remain true.
An excellent work that is a very powerful corrective to those fantasists who insist that “recovery is around the corner”.
What do we consider that the long term economic value might be of land that can cater for twenty years of Irish housing needs?
How do we think the bad debt profile of all banks in the worst economy in the Eurozone (and arguably in the world) will look in say, 5 years? After no stimulus indeed more taxes and fewer transfers, costs having fallen 25% by then?
One person’s costs being another’s income? Pretty grim?
NOW: dial in 90Bn at risk for twenty years and twenty years of interest payments at higher rateas as the rest of Europe powers up? Are we looking happier? I think not!
Isn’t it about time that we nailed our colours to the mast, me hearties?
Do we believe that we are entering into a greater depression …. or not?
How about a poll?
@Pat Donnelly
Yes, I believe we are. Next shockwave November or December?
12 replies on “Depression comparisons update”
Kevin, considering the global response – QE, consumer incentives, etc. it is not surprising that there has been some turn around in the figures. Much of how this recession plays out depends on how sustainable current incentives are, and what effects their cessation will have.
The actions taken globally so far are generally to be applauded, but as to calling a turn around in the global economy, I am reminded of what (the original) Zhou Enlai said about the French Revolution, “it is too early to say”
I agree that caution is appropriate, Lorcan.
An excellent piece of research and well deserving of the massive viewing figures it received previously. But, given that it is part funded by the Irish taxpayer, it is a pity that Ireland wasn’t included as one of the four small European economies analysed. If it had been, the contrast between Ireland and the dozen or so countries, for which industrial output charts were given, would have been striking and would have helped to boost Ireland’s economic reputation, which is currently being unjustifiably savaged on a daily basis in the world’s media.
The charts show industrial output down massively in every country since April 2008 (the authors’ chosen base month). In most of them the fall is about 20 per cent. I am unable to display a chart as the authors of this report do. But, I have calculated the corresponding monthly industrial output indices for Ireland to base April 2008 = 100.0. The figures are as follows:
Apr 2008 100.0
May 2008 112.1
Jun 2008 108.7
Jul 2008 111.5
Aug 2008 114.4
Sep 2008 111.5
Oct 2008 104.6
Nov 2008 109.8
Dec 2008 99.7
Jan 2009 113.1
Feb 2009 104.4
Mar 2009 111.1
Apr 2009 105.9
May 2009 102.9
Jun 2009 113.3
It looks as though Ireland is the only developed country in which industrial output in June 2009 was higher than in April 2008. A 13.3 per cent rise in industrial output in Ireland between April 2008 and June 2009 would seem to compare quite favourably with the 20 per cent falls recorded in nearly every other country. No doubt when Michael Hennigan reads this, he’ll be posting to say that the rise in Ireland is all down to the chemicals sector. But, even if the chemicals sector is excluded, the trend for Ireland over the period covered would be more or less flat. Not as good as when chemicals are included (as, obviously, they should be), but still much better than the massive falls recorded in every other country.
Perhaps Ireland can be included next time?
It took the Dow 25 years to reclaim its 1929 peak:
The Dow peaked at 381.17 on Sept 3, 1929. It crashed on October 28 and 29, 1929, falling from 301 to 230 or 23.6%
One year after the peak, the Dow closed at 237.54, down 37.3% from its peak. It continued to slide until July 8, 1932 where it bottomed at 41.22, down 89.2% of its value over 2.5 years
The Dow did not cross above 381 again until Nov 23, 1954, over 25 years after its 1929 peak.
http://www.finfacts.ie/Private/curency/djones.htm
@ John
Have a look at:
http://www.cso.ie/releasespublications/documents/industry/current/prodturn.pdf
Only if about 15 US companies could give us a permanent free lunch!
The PMI data today gives a broader picture of the state of manufacturing.
http://www.finfacts.ie/irishfinancenews/article_1017532.shtml
My job during the boom was to bring the über-optimists down to earth and I haven’t given up!
@Michael Hennigan.
The idea that Ireland’s massively superior performance in relation to industrial output during the current global recession is down to 15 firms is totally bonkers. As I’ve pointed out, even if the chemicals sector is excluded (and there is no reason why it should be), the fall in manufacturing output in Ireland during the current global recession is still much less than the 20% fall recorded in virtually every other developed country. And, if the chemicals secor is included, manufacturing output has actually risen in Ireland during the current global recession. If you bothered to check the figures, you’d find that manufacturing output in Ireland has been growing faster than in any other EU15 country for about 40 years and long predates your self-appointment to the job of doom-monger general.
@John: I’m sure you didn’t mean to imply that the direction of research should be influenced by the sources of funding, which would run counter to the principle of academic freedom.
No, I won’t be including Ireland next time around for the simple reason that I couldn’t find monthly Irish data beginning in 1929.
Kevin,
Great analysis, and invaluable as ever.
One interesting outcome of the collapse in world trade over the last year is that despite it being a huge wallop, the world trade rules system has remained more or less intact (would be interested if this is your take Kevin). An interesting dataset on the use of trade `remedy` policy instruments such as antidumping, safeguards, and countervailing duties (anti-subsidy policies) in response to domestic industry demands for protection from import competition is available from Chad Brown, link below. It shows that while there has been a significant up-tick in the use of these measures, the projected total for 2009 is still less than the far shallower 2002 economic decline.
See: http://people.brandeis.edu/~cbown/global_ad/monitoring/2009-07-23-Bown-GAD-Monitoring.htm
@Ronnie: yes, this has been one of the positive features of the crisis thus far. Long may it remain true.
An excellent work that is a very powerful corrective to those fantasists who insist that “recovery is around the corner”.
What do we consider that the long term economic value might be of land that can cater for twenty years of Irish housing needs?
How do we think the bad debt profile of all banks in the worst economy in the Eurozone (and arguably in the world) will look in say, 5 years? After no stimulus indeed more taxes and fewer transfers, costs having fallen 25% by then?
One person’s costs being another’s income? Pretty grim?
NOW: dial in 90Bn at risk for twenty years and twenty years of interest payments at higher rateas as the rest of Europe powers up? Are we looking happier? I think not!
Isn’t it about time that we nailed our colours to the mast, me hearties?
Do we believe that we are entering into a greater depression …. or not?
How about a poll?
@Pat Donnelly
Yes, I believe we are. Next shockwave November or December?