An Artist’s Labour…
We want you to see something which we find fascinating, though we are not sure our instinctive reaction has even the least validity.
Below is a graph, from the blog Calculated Risk, which presents the job losses of all the post-war recessions in the form of a series of curves plotted out as a percentage of the pre-recession high in employment (vertical axis) and the length of time of the recession (horizontal axis).
So, for instance, in the last recession prior to this one, which began in 2001 (the dark brown line) employment fell by 2 percent, and took about 46 months to recover to its pre-recession level.
As you can see from the chart, the 2001 recession was the longest recession on record, but it was not the deepest when measured in percentage job losses – the latter record is held by the 1948 recession, here represented by the blue line.
Some other things which might interest you:
SHAPE OF THE JOB LOSS CURVE
- You will notice that in each recession job losses are symmetrical: it usually took as long to recover from the loss of jobs as it took to lose them
- Notice also the change in the shape of the recessions: in the pre-1990 recessions the shape of the job loss curve is rather a bit like a martini glass – or a letter “V”; however, the 1990, and 2001 recessions a more like a shallow bowl – or letter “U’
Employment in 1990 and 2001 fell more slowly than in earlier recessions, and recovered more slowly as well.
One possible explanation for this is that each of the recessions from 1948 to 1981 were Washington engineered events: Washington deliberately raised interest rates, and threw millions out of work to slow the inflationary rise in prices.
Millions suffered from these manipulations, but the assets of the moneyed classes were protected. (Which explains why you are usually referred to as sheeple in the less discrete conversation among power brokers.)
DURATION OF THE JOB LOSSES
- Notice how the job losses in 1990 and 2001 continued for much longer than earlier recessions: the average time to recovery of job losses for the 1990 and 2001 job losses were 38 months; while the post-war average is 19 months. (We calculated this using the information on the charts.)
The recovery from job losses in the last two recessions took exactly twice as long as the recovery when Washington engineered the downturn.
DEPTH OF THE JOB LOSSES
- The average percentage of job losses prior in the 1990 and 2001 recessions were 1.7 percent; which is much less of a decline than the post-war average of 3.25 percent
Washington did not engineer the last two recessions, so job losses took longer to complete, recovery from the job losses took that much longer, but the losses tended to be milder.
We conclude this last fact might be explained by the fact that Washington, faced with a job collapse not of its making, responded to the sudden eruption of job losses by furiously pumping money into the economy to stem the unplanned economic downturn.
Which brings us to the red line – the present unfinished eruption of joblessness.
And, as you can see, it shares the characteristic with the post-war average recession that there have been very deep job losses – the second deepest on the record books.
Unless the job losses stop by October or November, it will be the deepest fall in employment since the Great Depression.
But, that is not all – not by a long shot:
- Like the recessions of 1990 and 2001, the current recession exploded spontaneously, it was not a Washington engineered event
- And, like the recessions of 1990 and 2001, productivity continues to rise during the recession, meaning the job losses are permanent and irreversible
- Which means the shape of the job loss curve, and the duration of job losses will resemble that of the 1990 and 2001 recessions, and not that of the post-war average
All of which implies that there are an unimaginable amount of job losses still ahead of us.
There is nothing scientific about what we have written here: We are simply engaged in interpreting the above chart as a collective work of social art.
Asking ourselves, based on the fragment of the sketch tentatively laid on the canvas thus far, what image the artist is trying to create.
ADDENDUM: The Federal Reserve Bank of Minneapolis has a nice set of interactive charts you can use to contrast and compare the current recession with the other post-war recessions, and come to you own conclusion.