After levelling out in the second quarter the total output of the industrial countries increased quite sharply in the third. The rise was, however, heavily concentrated in the United States. Production has begun to increase also in Japan and Canada and, more recently, in France and West Germany. But it has become increasingly clear that in the smaller countries of Western Europe the main impact of the recession had to a considerable extent been delayed rather than avoided. So far, moreover, the recovery in the major countries has depended heavily on the reduction or reversal of the previous liquidation of stocks and on high rates of government spending. There appears as yet to be only a very limited revival in final demand for consumer goods and still little immediate prospect of a recovery in business fixed investment. So long as this remains true, confidence that a fairly rapid rate of growth will be sustained for the next year or two must be tempered with caution.