There was some justified criticism of Nancy Pelosi’s job loss graph: First, that it showed absolute losses rather than relative to the size of the job market and secondly that in only included the two most recent recessions, both of which were relatively mild.
Here’s a graph from calculated risk blog, by way of Daily Kos, that corrects for both of these (click for larger image):
A couple comments:
– Recent recessions have been shallower, but had slower recoveries
– While we haven’t hit bottom yet, so far we are more or less in line with past recessions. It’s too early to say if this downturn is significantly worse than in the past.
– The real question is whether we can make a quick turn around, as in the pre-1990 recessions, or have a long period of poor employment numbers.
Is it, a “U” shaped recession, or a “V”. Interesting that the more recent are U shaped, and therefore prolonged.
That newer graph is just as scary, BTW.
<
p>As bad as 1981 is bad enough for me, thanks.
At what point do we make distinctions between recessions that follow one another in rapid succession?
<
p>That is, the 1980 recession was a relatively quick one, lasting about 10 months or so. But it’s followed pretty quickly by the 1981 recession which lasts two years. How is the 1980 recession not a larger part of the 1981 recession with a temporary respite?
<
p>Similarly, the 1958 recession lasts about 24 months according to that graph. At what point is that distinct from the 1960 recession, again with a brief respite?
a recession is over when the number of people employed in non-farm jobs is greater than when it began.
<
p>Recessions are usually defined in terms of negative growth of GDP, so this definition is rather arbitrary.
That daily kos of all places would issue such a correction (assuming they got it right) and that BMG would jump on it – showing this recession to be not all that bad so far.
<
p>Part of the reason is it seems to undermine Obama’s catastrophe-speak.
<
p>The other, larger part is that it seems a missed opportunity to blame Bush for the worst everything, ever.
<
p>I wonder, does this mean that Obama now owns the recession? My, that was quick!
<
p>I do like the chart though, again assuming they got it right. A nice perspective.
<
p>
“…does this mean that Obama now owns the recession?”
<
p>Yes. Limbaugh, Hannity and Dick Morris handed him the keys on Nov. 6.
That’s why.
If the graph was based on the same criteria I would agree it is completely relevant and thus suggests we are merely headed into a cycle down turn based on history since 1948.
<
p>But a key issue, is by the nature of the graph, overlooked and that is the Stability of the Economic Engine. Look back at all of the down turns listed and you will see very few indications that the Fincial Sector was so destabilized that it appeared to be on the brink of total collapse. Typically these recessions were sector based even 1958, which hit the auto industry very hard, was mainly directed to that sector which had a realignment and reduction in competition. as did the 1980 and 1981 recessions.
<
p>The point that has been missed and somewhat hard to get arms around is the Banks are in serious trouble. Now I don’t think anyone is pointing to many of the small regional and local banks as being destabilized, what is being referred to are the large financial institutions which here again deal in transaction that amount from the several million to billions not a retail local bank scope yet the capital that they control and deal is approaching 70% if these are to fail the house of cards comes crashing down and the large corporations that rely on these large congregated cash ATMs will suffer and in turn the Trickle down becomes a water fall washing away jobs at every level.
<
p>Ad in the complication that as the Mortgage industry became the decades huge profit generator and bolstered bottom lines although artificially of these institutions as they bought and sold large bonds of retail consumer debt, here again has achieved such a huge % of the bottom line that the down turn coupled with the collapse of the insurance (Credit Default Swaps) has erased the profits and working capital of these banks thus drying up credit to the largest borrowers. The Spiraling effect has been to dry up retail lending ie credit cards, home equity’s and refinances, to such an extent that consumption (70-80%) of our economy has collapsed and the trickle is now and open faucet.
<
p>The Risk is that if large capital investment does not return soon the patient will die and the once open faucet turns into Niagara Falls and the down hill effect on the economy will be devastating. Not to mention as some one so clearly pointed out the duration of this down turn could become generational in length. The cost of this on the social safety net programs could be greater even to the point of crushing to our country and certainly our government if it fails in an attempt to slow and stabilize the ship. It is very unlikely we will be lucky enough to find a Hudson River to ditch in.
<
p>Paul Krugman’s observations as a whole have been right on point and his use of this graph to place it into perspective is well intentioned but again I will suggest that the graph does not reflect the serious insolvency in the financial sector of our economy.
<
p>In my opinion we have entered into the first phase of a new Depression (deep Recession) that is likely to last a decade with unemployment likely to reach the low teens before we begin a slow growth that may take 10 years to elapse our previous employment numbers remember if you take out the effects of WWII the economy did not recover from the great depression of 1929 until 1954 a span of 25 years. I believe the President and the Treasury Secretary are working very hard and are focused on a softer landing with a slow build out that may take 8-12 years all of the plans thus far appear to be geared toward this outcome.
<
p>This timetable is extremely difficult to understand with the reports of the Billions, Trillions of Dollars being forced into the system. What numbers that are sometimes overlooked in the fact that we are looking at $5-6 Trillion in paper loses to banks, investors and individuals. So replacing $1-3 Trillion into the system is at best half the money lost and as we see time go by we are experiencing a 6- 9 month time frame when we would have likely added another .5-1 trillion in wealth at our old rate of growth so this two weighs heavily on the actual loses. Snapshot thus is now $5.5-7 Trillion and counting, do I hear anyone who is willing to support and larger Stimulus package.
<
p>As Usual just my Opinions