The previous peak is not the appropriate benchmark

At AEI Mark Perry writes: “A testament to economic resilience: World trade and output both reached new all-time record highs in October”:

Bottom Line: World industrial output and world merchandise trade both reached new record monthly highs in October. The volumes of world output and trade are now both solidly above their previous peaks during the early months of the global slowdown in 2008 (by 10.1% and 7.2% respectively), suggesting that the global economy has now made a complete recovery from the 2008-2009 economic slowdown.

Not quite. In the case of world industrial production it seems to have gotten stuck at a permanently lower (parallel) trend level.


In the case of the world trade volume, it is distancing from the previous trend, with a much reduced level (and growth rate) of trade suggesting the world economy is still mired in a depressed state!

Perry_2Update: Part 2 follows


One thought on “The previous peak is not the appropriate benchmark

  1. I think Mark Perry means well, but he is unfortunately supporting the new “this is the bet we can do” school of economists, who seem to say a “C student economy” is the best we can hope for.

    A situation perpetrated long enough becomes the norm.

    I wonder: If many of the top economists were not in safe sinecures, and personally successful, would they be so accepting of subpar economic performance? How about Fed staffs? Suppose their pay was linked to real economic growth?

    Yes, an impolite pair of questions. But….

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