First, some charts of what today's BLS Employment Situation report are showing, followed by some personal thoughts. The three charts compare the change in employment numbers relative to the first month of the recession for the present recession as well as an average of the last five recessions. Note, I count the dual 1980-82 recession as a single event.
It seems evident from these three charts that no matter what measure you consider, our present situation is worse in at least the intensity of decline. Also, many recessions end after 12 months or less, and a turnaround is often visible in the data - revised data, I should add. I'm afraid 2009 will be an ugly one economically. The story in the New York Times tells us how bad and surprising the report is.
Again, everyone is surprised at how bad the recession is getting. It defies forecasting models as if they were the dunces in the corner. Why? Because this is not a mathematical downturn. We already know the panic in the financial markets led to a consumption drop way beyond what rational behavior would suggest, and now we know that employers are overeacting as well. Kind of feels like the economy has downshifted to a lower equilibrium, or is in the process of doing so.
So this is what its like to stop living beyond your means, I guess.
Anyone looking for a positive note, remember that this downturn is all relative. Comparisons to the Great Depression are overblown because no matter what happens, we have things like electricity, central air conditioning, and cheap telecom that put out level of prosperity in another world. We should remember that a modern global depression is strongly preferable to a 1928 boom. A much greater percentage of our babies will be born healthy and surive their first year, far fewer people will die in pain and hunger, plus our movies have much better special effects. Let's keep our priorities straight.
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