Time Clock

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The recession of 1920-21 was marked by a precipitous 45% drop in wholesale prices, because of overloaded inventories, and" soaring unemployment (up 752% to 4,800,000 in a year). Stock prices dropped about 18% (the Dow-Jones industrials fell from 90 to 73) and industrial production fell 23%. On the other hand, in 1937-38 wholesale prices fell only 9%, while industrial production and the stock market each fell about 20%. Unemployment rose from 6,400,000 to 9.800,000. By the standards of those earlier years, what happened in 1949 was merely a statistical flutter. Unemployment rose some 60% in a few months to 3,400,000 (not even high enough to meet Nathan's present-day definition of recession). Prices declined only slightly, industrial output dropped a mere 8%, and stock prices, after a quick 10% dip, were higher (200.52) at the end of 1949 than they were at the end of 1948.

Using these same yardsticks, it is hard to prove that the U.S. is in a recession now, although sales are down in some industries. Industrial output of 232 is near the postwar peak of 243, unemployment of 1,200,000 is near its alltime low, stock prices are only 6% below their bull-market peak, and the gross national product is within a shade of its peacetime high.

Actually, a spate of recession predictions has been a recurring phenomenon of the great boom. Time and again, economists have predicted that business would turn downward, usually in "about six months." But as the "six months" stretched into years with no drop, economists became more cautious. They now predict a decline in such indefinite terms that they can't be wrong. Only the future will determine whether the U.S. is now undergoing a "rolling readjustment" or "recession," or merely passing once again through a period of "Whatchamacallit," i.e., a troubled economic period which gives rise to all manner of dire predictions.