1991 Recession Impact on US Mining and Metals

The 1982 recession set the US mining and metals industries reeling. Will the oncoming recession of 1991 hit as hard? Probably not, thanks to a shallower downturn, a weaker dollar and remarkable lower costs. Effects of the last recession That the 1982 recession was traumatic to the American mining and metals industry is an understatement. Quantities of metals consumed dropped. Metals prices fell despite continuing general inflation. The resulting real gross revenues of producers of each of the major metals plunged, in the trough of 1982, to levels one-fourth to two-thirds of those of the peak of 1979 (Table 1). By contrast, most industries in the United States were not hit anywhere nearly as hard. Real GNP, the aggregate of all production, slipped only 1 % from 1979 to 1982. Metals are most sensitive to the business cycle because of their applications. All metals but gold are raw materials to downstream industries. Raw materials are victims of strong fluctuations. This is because buying industries try to hold high inventories in boom periods when goods are in short supply. They reduce inventory levels in buyers markets when suppliers have idle capacity and raw materials are in ample supply.