The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 63

What Do You See in This Pattern?

No, this chart isn't an ink blot test, but the folks who see lots in ink blots may be the first to learn its lesson. It sure popped my eyeballs when I stumbled on it. It's important for three reasons. First, it's a one-of-a-kind, at-a-glance, thumbnail, long-term overview of the Western world's business cycles. Second, it is from the earliest authoritative source on world economics, Wesley C. Mitchell's 1927 classic, Business Cycles, the 10th-ever book by the National Bureau of Economic Research (NBER). The NBER is the official U.S. scorekeeper for recessions, expansions, and the like. Mitchell was its founder, and for 25 years its director of research, also former president of the American Statistical Association and generally credited for first standardizing economic statistics. Almost without doubt, had Mitchell survived until 1970, he would have been the first Nobel Laureate in Economics instead of Simon Kuznets. GNP accounting work couldn't have existed without Mitchell's prior groundwork. Finally, the chart is important because of its visual lesson.

Looking at the chart, you can learn the lesson without paying much attention to detail. All you really need to see is that it describes the major Western countries, and each different shade represents some different economic event. Notice how most shades line up, neatly stacked on top of each other—the blacks mostly on top of the blacks, the whites mostly on the whites, and so on. Whatever ...