Tracking The Second Great Depression

So far, the collapse of the world economy since April 2008 has been worse than the collapse in the Great Depression.  One glance at the fall world output, trade, and stock prices puts the recent “green shoots” in perspective.

The government policy response to the collapse, however, has been much more aggressive.  Thus, we will soon collectively learn whether the economic historians are right that the original Great Depression was caused by “policy errors” after the collapse…or whether, as some suspect, there is simply no way to avoid catastrophe after a financial bubble the size of the one we just had.

Professors Barry Eichengreen (Berkeley) and Kevin O’Rourke (Trinity) have updated their series of charts that compare the progress of this “Depression event”, as they’re calling it, with the Great Depression.  The originals and a more detailed write-up can be found here, at Vox.  We’ve arranged them into a quick slideshow below.

Key Points From Vox:

  • World industrial production continues to track closely the 1930s fall, with no clear signs of ‘green shoots’.
  • World stock markets have rebounded a bit since March, and world trade has stabilised, but these are still following paths far below the ones they followed in the Great Depression.
  • The big-4 EU nations divide north-south; today’s German and British industrial output are closely tracking their rate of fall in the 1930s, while Italy and France are doing much worse.
  • The North Americans (US & Canada) continue to see their industrial output fall approximately in line with what happened in the 1929 crisis, with no clear signs of a turn around.
  • Japan’s industrial output in February was 25 percentage points lower than at the equivalent stage in the Great Depression. There was however a sharp rebound in March.


Barry Eichengreen
Professor of Economics and Political Science at the University of California, Berkeley; and formerly Senior Policy Advisor at the International Monetary Fund. CEPR Research Fellow

Kevin H. O’Rourke
Professor of Economics at Trinity College Dublin and CEPR Research Fellow

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