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HomeEconomyIndustrial production in the 1920-21 recession compared to a hypothetical 2022 recession

Industrial production in the 1920-21 recession compared to a hypothetical 2022 recession


Here is the industrial production (Fed, Miron-Romer) index during the 1920-21 recession, as readers Steven Kopitz Think of this as a template to speculate on the ongoing recession (or early stage – the guesswork is constantly changing).

figure 1: Industrial production from the Federal Reserve (blue) and Miron-Romer (tan), both normalized to the logarithm of 1919M01=0. The NBER recession dates from peak to trough are shaded in gray. Red dotted lines at the beginning and end of an influenza epidemic. Source: Federal Reserve via FRED, Miron RomerNBER, and the authors’ calculations.

Note that industrial production fell in the recession of 1920-21. Can we compare the experience since 2021M11 (the peak of official GDP is 2021Q4)? Why, yes we can! Below is the evolution of the Fed series in both cases.

figure 2: Industrial production logs normalized to 1920M01=0 (tan) and 2021M11 (blue). The date represents the month since the NBER peak or assumed NBER peak. Source: Federal Reserve through FRED, NBER and author’s calculations.

To me, this shows that the similarity between 1920-21 and 2021-22 does not exist.



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