If the recovery process were to be a true recovery. Under the Austrian business cycle theory, higher order goods would be first to recover correct? If so, is there a place where I can see that the recoveries in the past show that higher orders were first then lower orders, and show it to be false if its a false recovery?
I would say only to a small degree. People may prefer more higher order goods in a recovery but that is not an indication of the strength of a recovery or even if it exists. (I really hate the term “Recovery” and prefer the longer term “Consumer Driven Production Reallignment”.) My feeling is that a Recession/Panic/Depression is caused by artificial credit causing malinvestments (Investments that do not produce goods consumers want). The Recession/Panic/Depression “recovery” is not a recovery but a painful process of liquidating malinvestments and redeploying those resources to produce products and services consumers prefer.
Look at the recent boom in housing and autos. Large increases in the production of products in these areas did not signal a strong recovery but the building of a bubble that popped later.
Why would you say that?
The first businesses to recover would be those that are able to cut costs and innovate enough to entice the consumer back.
Actually, ABC states that lower order goods are the only goods that recover, higher order goods having been over-produced during the extension of the capital structure caused by the credit inflation.
its not an overprpoduction theory, its a misproduction theory. how about, some higher order goods recover more than others…
They would not recover at all if their production was an error.
well then, i’m glad we agree