Industrial output in the Group of Seven (G7) major economies fell an estimated 12% between February and December last year, based on data for six of the seven countries (Canada has yet to publish for December). This is equal to the peak-to-trough decline during the 1974-75 recession – see first chart.

Business surveys signal a further fall in output in early 2009, implying the current G7 industrial slump will soon be the deepest since World War 2.

For a longer perspective, the second chart shows estimated annual average growth rates of G7 industrial output back to the late nineteenth century. The underlying country statistics were assembled from various sources, including an Economist publication One Hundred Years of Economic Statistics.

If annual average G7 output in 2009 were to equal the December level, it would be 9% lower than in 2008 (red line in chart). This would be the largest annual decline since 1938, when the "Roosevelt recession" in the US led to a 10% drop.

However, the current downturn would have to extend hugely in magnitude and duration to be comparable with the depression of the early 1930s. G7 industrial output plunged for three successive years – 9% in 1930, 13% in 1931 and 10% in 1932.

The third chart shows annual rates of change of G7 output and inflation-adjusted broad and narrow money supply measures. While G7 activity will slide further in early 2009, strengthening real money growth continues to offer hope of an improvement in economic trends later in the year.