PUTTING THE JOBS PICTURE IN PERSPECTIVE
Yesterday, the Labor Department reported that nonfarm payrolls (jobs) decreased by 125,000 in June — the first decline in six months. Today’s chart puts the latest data into perspective by comparing job losses following the beginning of the current economic recession (solid red line) to that of the last recession (dashed gold line) and the average recession from 1950-1999 (dashed blue line). As today’s chart illustrates, the current job market has suffered losses that are more than triple as much as what occurs at the lows of the average recession/job loss cycle. Also, today’s decline in jobs provides further evidence that the current economic recovery has begun to cool.
Notes:
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3 Comments
This is a pretty deceptive chart, in that it includes a lot of earlier recessions, which weren’t marked by high unemployment.
The only recession that we’ve had since 1948 that had unemployment exceed 10% was the Reagan-era recession of 1981-82, when the rate hit 10.8%. It helps to show what jobless recoveries can look like:
-Per the NBER, that recession began in July 1981 and ended in November 1982
-Per the BLS, unemployment was 7.2% when that recession began, crossed the 10% mark in September 1982, two months before the recession ended, and then peaked in November-December 1982.
The unemployment rate peaked in the final month of the recession and the month thereafter.
Once the recession ended, unemployment remained above 10% for another seven months.
It didn’t decline to the 8% mark until January 1984, 14 months after the end of the recession.
It didn’t go below 6% until August 1987, almost five years after the recession had ended.
Unemployment is a lagging indicator. Clearly, full employment is not needed for recovery, as the recovery from the 1981-82 recession makes clear. Full employment comes as a result of recovery, and unemployment reductions aren’t necessarily quick.
During the current recession, unemployment peaked in October 2009. So far, the rate has been falling at roughly the same pace that it did during the recovery period of 1983. The recessions of today and tomorrow are probably not going to resemble the near-full-employment recessions of the immediate post-war era, and we’re going to have to get used to it.
Thanks MBA – great perspective.
How about checking this out–more realistic jobs picture.
http://jessescrossroadscafe.blogspot.com/2010/07/note-to-mish-bls-added-145897-imaginary.html