Davis (2004: 1189) provides a new index of US industrial production. Davis used 43 annual components of manufacturing and mining industries in the US, which represented about 90% of manufacturing output in the 1800s (Davis 2006: 105), so that his index seems to be a reasonably good proxy for real US GDP, and certainly in the late 19th century when the manufacturing sector had become a dominant part of the US economy.
We can see a graph of Davis’s index for the years from 1880 to 1903 below.
Davis (2006: 106) finds that the US had a double-dip recession from 1892–1894 and in 1895–1896. Balke and Gordon (1989: 84) essentially support this, and also find recessions roughly in these years.
To put the double-dip recession of the 1890s in perspective, we can see a broader version of US industrial production index from 1865 to 1914 below.
As we can see, the real output contraction was the most severe of the late 19th century.
We have already seen in the previous post that we have reason to think that Lebergott’s estimates of the unemployment rate in the 1890s are probably better than other estimates, and they can be seen below.
Unemployment clearly soared in these years, and the US experienced a severe economic crisis. The unemployment shock was quite comparable to that in the 1930s (even if not as bad), and it was not until 1901 that unemployment came down to about 4% – the percentage normally taken to be a rough approximation of full employment.
Balke, N. S., and R. J. Gordon, 1989. “The Estimation of Prewar Gross National Product: Methodology and New Evidence,” Journal of Political Economy 97.1: 38–92.
Davis, J. H. 2004. “An Annual Index of U.S. Industrial Production, 1790–1915,” Quarterly Journal of Economics 119.4: 1177–1215.
Davis, J. H. 2006. “An Improved Annual Chronology of U.S. Business Cycles since the 1790s,” Journal of Economic History 66.1: 103–121.