Manufacturing output is contracting around the world. JP Morgan's global index sank 15% in December, and they expect "an intense contraction phase" to continue "for some months to come". The G7 and BRIC countries are all seeing a decline, as Nouriel Roubini notes:
• The US ISM manufacturing index hit a record low of 32.2 in December
• Eurozone manufacturing hit a record low of 33.9
• Japan suffered its worst-ever fall in November, plunging 8.1%
• Brazil's index is at 41.6, well below the neutral 50 level
• Russia's index fell to 33.8 in December, lower than in the 1998 crisis.
• India's production fell in October for the first time in 15 years
• China's December index remained close to November's record low
Meanwhile, Nobel laureate Paul Krugman points out that despite recent government moves to provide banks with more liquidity, "credit remains scarce, and the economy is still in freefall".
He warns that "this looks an awful lot like the beginning of a second Great Depression". And he worries that the fiscal stimulus planned by President-elect Obama may take months to pass Congress, and end up being too little, too late.