The chief economist for the Fabricators & Manufacturers Association says this downturn is not worse that those experienced in the last 40 years.
Contrary to many economists’
declarations, the current recession is not worse than those endured in the past
four decades and should begin to ease in the latter part of the year, says the
economic analyst for the Fabricators & Manufacturers Association.
“Unless the current doom and gloom becomes something of a self-fulfilling
prophecy, the recession is on a par with past downturns and real improvement
will start to manifest itself in 2010,” said Chris Kuehl, Ph.D., in a recent FMA
economic update newsletter Fabrinomics.
his assertions on how the National Bureau of Economic Research defines
“The NBER has a reputation as being pretty conservative and reacts
to factors beyond GDP (gross domestic product) to declare a recession,” Kuehl said. “It uses six criteria
to determine when a recession has started and when it ends. These are GDP, real
income, employment, industrial production, wholesale sales and retail
After an analysis by Kuehl of government charts
that track GDP, income, unemployment and production since 1970, he said things are not the worst they've every been.
“It is pretty apparent the recession of 2008-09 is not worse than those in the
past four decades. In fact, the recessions of the 1970s and 1980s were arguably
more painful on almost every level.
“For example, real GDP dipped lower in 1975 and 1980, and unemployment rates
were higher in 1981-82,” he added. “The statistics also show that although this
is no shallow and unimportant recession, it isn't the worst we have been through -- not by a long shot.”
Data on wholesale and retail trade were not collected
in a uniform manner before 1995, so comparisons between now and the '70s and
'80s are not possible.
Kuehl acknowledged many U.S. businesses are suffering despite
who are frantically trying to hold their business together, the recession is as
bad as it gets,” he said. “But for those who are trying to decide how radical
they need to get to protect their business, a realistic assessment is needed. At
this stage, the recession is on a par with what has been endured previously,
which means it can and will be survived.
strategy now should be to hunker down and wait out the downturn -- without taking
steps that gut a company's ability to react to the turnaround,” Kuehl said.
“This means hanging on to valued employees who soon will be needed again. It
means making those investments in capital goods that keep a company competitive,
and it means staying true to strategic goals in
“If this is
a normal recession people can overcome, a wait-and-see attitude is more
palatable than if the conclusion is that we are facing the end of the economic
world. According to the numbers, we are not facing the latter
situation,” Kuehl added.
FMA: This is not the worst recession ever
March 20, 2009