What occurs to manufacturing during a period of LOW consumption?Like the Great Depression

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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During a period of low consumption, consumers are not buying as many things.  From that, it is fairly clear what will happen to manufacturing.  Manufacturing will fall and jobs in manufacturing will be lost in times of low consumption.

In times of low consumption, the demand for manufactured goods will go down.  For example, the demand for cars here in the US has been much lower since the financial crisis of 2008 than it was before that time.  Cars are manufactured goods and the demand for them crashed because people had no money to buy them.  This meant that many jobs were lost in auto manufacturing.

When there is a period of low consumption, as in the Great Depression, there is less demand for everything, including manufactured goods.  Therefore, production drops and jobs are lost.  This is what happened to lead to the 33% unemployment of the early '30s.

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