Our view of the world economy has grown gloomier during the last three months. It has become increasingly clear that we (and, far more significantly, governments) had underestimated the level of demand that would be needed to induce industry to add substantially to its productive capacity and, in Western Europe, to cease to reduce its work force. The revival of business investment has been generally weak, while unemployment has been falling more slowly in the United States and rising rapidly in Canada and Western Europe, thus further depressing the expectations of consumers and investors alike.