This graph is from the Federal Reserve Bank of Minnesota via Mark Thoma. The current Great Recession, or what I like to call The Great Reset, is longer and deeper. Or, as Thoma puts it: “One of these things is not like the others.”
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March 28th, 2010 at 3:56 pm
I don’t know if it’s the same in the US, but here in the UK unemployment is going to worsen in the new financial year and the following one as the public sector makes cuts to meet budget constraints from central government grants. The police are set to make large numbers of jobcuts, as is local government – however, some of this may be from Conservative Councils using the funding climate as a disguise to hide their personal anti-state vendetta…
March 28th, 2010 at 11:34 pm
Connor — your suspicion is correct. US state and local governments have been cutting jobs.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a0AJDADVP_N8
My sense is that in the US the cause is “no money” rather than a political agenda per se. Many states and cities have to balance their budgets, and with shrinking income and other tax revenues they have to cut spending, which means services and jobs.
March 28th, 2010 at 11:42 pm
Richard,
I’m wondering what the graph would look like comparing job losses in Canada, Australia, NZ, various European countries, and the US in this recession and an “average” recession for each.
My hypothesis is that Canada, Australia, NZ and some others may have already “reset” (or restructured) and thus have fared much better over the past 18 months. Evidence that the reset happened in the 1980s and/or 1990s would be in noting the job losses in those recessions, especially the structural unemployment of duration 6 months or longer. Canada had this reset in the 1990s, shifting to become a small, open trading country in the global sphere. Australia certainly reset its economy during the 1990s, hitching itself to Asian and global trends.
Perhaps there are lessons for the US future — in terms of what to expect and how long it will take — from the recent past in these other places.
March 29th, 2010 at 3:45 am
Wendy,
That’s interesting. The “UK is better geared to grow because of reforms made by Thatcher” thesis was a popular one here in the UK before 2007, as we saw a more stable economy that on continental Europe that was seeing riots in France and Greece as the public sector was “restructured”.
Ant then lo and behold that thesis has entirely disappeared…
Also, the Conservative argument that “there is no money” is largely spurious. If the UK government could bail out banks to the tune of circa £50bn, then it rings a bit hollow when they’re shafting police officers, nurses, social workers and teachers to “save money”.
March 29th, 2010 at 6:56 am
I said at the outset of the panic that many of these employment layoffs had more to do with an excuse to eliminate unnecessary middle-management positions and baby-boomers without getting sued for age discrimination than pure economics. Most companies were carrying more employees than they needed given technological strides that increase productivity.
March 29th, 2010 at 10:36 am
Hayden,
The fact that unemployment is continuing to increase in the graph even though recovery is underway is perhaps evidence of your assessment, and I agree with it.
However, it’s difficult to see just how technology makes a social worker more efficient when dealing with children in care, or how the pastoral care of nurses gets any more effective when undertaken via Skype, or how teachers can teach greater number of children with an interactive white board. Yes, administration and planning can be far more efficient and effective as a result of technology, but when the key factor is face to face contact, there’s little I can see that technology can improve.
March 29th, 2010 at 2:40 pm
Daniel,
The US job cuts are coming from state and local positions, while it was the US federal government that bailed out the banks, GM, Chrystler, etc. And it’s the federal government who can run a deficit and finance it by selling bonds.
The states and cities are often precluded by legislation from doing these things–or have to go to the state voters directly to request more funds and these tax payers always say no.
It’s my understanding that federal government jobs in the US have been growing throughout this mess, or at least holding steady. So the parallel with the UK may not be there completely if the UK is laying off national gov’t employees.
March 29th, 2010 at 6:15 pm
The current one seems to continue down after “recovery” started. I suspect this is because we’re seeing fundamental changes in the economy, not just swings in business cycles.
The more recent recessions also seem to last longer, the three that go off the left of the page are 2001, 1990 and 1980 (although when does 1980 change into the 1981 recession?). 1980 and 2001 also don’t get back to zero before they run off the 3 year chart.
To delve into politics, I think Bush’s mismanagement of the economy (actually, practically everything) while the reset was getting going has made the drop harder and longer. With different priorities and policies around research, immigration, taxes and industry the fundamentals would have been stronger when the bubble burst.
March 29th, 2010 at 7:17 pm
I meant off the right of the page, am I getting dyslexic?
March 29th, 2010 at 9:01 pm
Concur that social worker, governmental worker and similar jobs have not seen recovery due to governmental budget shortfalls principally. That’s clearly part of the equation although some areas have begun to recover while others have not– part of the transformation of the clustering-economy. On the other hand, some of theses jobs were simply rendered obsolete years ago but firms and companies kept people on board out of kindness or fear of being sued. Also, outsourcing correlates to these findings. Unemployed workers will have to fend for themselves and become entrepreneurs, like it or not, in many cases.
April 7th, 2010 at 10:21 am
It’s only levelled out until people realise that there really is no way back up – automation, increasing consumption, increasing population, baby boomer retirement, and a massive energy crisis are just around the corner and are going to combine to send everything down the tubes – times are changing, this is not like any other recession.