Let’s compare this recession’s job losses with the recessions of 1990 and 2001.
About the following charts. The charts’ data starts with the peak jobs during the beginning of each recession. So that is the zero point.
In the 1990 recession jobs peaked June of 1990 and headed south after that. In the 2001 recession the peak in jobs occurred in December 2000. And in the current recession, which as you know has been declared over, the peak in jobs occurred in December 2007.
The x-axis for each chart is months from the peak in jobs for each recession.
The first chart up is the monthly net gain or net loss of jobs in each of the recessions taken out 50 months from the peak in jobs for each recession.
More on the flip.
Chart Data Source:
As you can see from the chart above this recession is much, much worst for jobs than the 1990 or 2001 recessions.
During the the past 2 recessions job losses on a monthly basis never strayed below the 200K area for very long.
In fact during the 1990’s recession monthly job losses only exceeded 200K 3 times. And the longest streak of continuous monthly job losses was 11 months. So it was a mild (baby bear) recession.
During the 2001 recession monthly job losses only exceeded 200K 5 times. The last month of 200K or better job losses occurred after the recession was officially declared over. And the longest streak of continuous monthly job losses was 15 months. So it was a medium (momma bear) recession.
During this recession monthly job losses have exceeded 200K 13 months so far. And that’s consecutive months to boot.
The streak of continuous monthly job losses currently is at 21 months. And we are still a long way from a net monthly gain in jobs. So it is a major (papa bear) recession.
Now please allow me to depress you further with the next chart. This chart show the cumulative monthly job losses or gains from the peak in jobs point of each recession.
Holy Cr*p! The line for the cumulative job losses for this recession looks like a black diamond ski run in Vail, CO.
As you can see cumulative job losses in this recession so far are 2.77 times more than the worst levels in the 2001 recession which occurred in the 32nd month after the peak in jobs. And dare I say it, 4.5 times more than the worst levels in the 1990 recession which occurred in the 11th month after the peak in jobs.
Another interesting aspect of the above chart is this. In the 1990 recession cumulative job loss totals remained fairly constant at their worst levels for 11 months (10th month to the 21st month) before finally rising back to zero line in the 32nd month. In the 2001 recession cumulative job loss totals remained fairly constant at their worst levels for 7 months (27th month to the 34th month) before finally rising back to zero line in the 49th month.
So what does that tell us? Well, let me tell you. Based on the past two recessions, at some point during this recession cumulative job loss totals will remain fairly constant at their worst levels for a number of months. How many months? Your guess is as good as mine. I do know this. And that is, we are still several months away from the cumulative total leveling off at the bottom. Will we reach 8 million jobs lost during this recession? More likely than not. I don’t think 9 million is out of the question at all.
To call this jobs recession over, I would like to see the cumulative job loss total rise at least 25% above the worst levels for this recession. And that is after they have remained at their worst levels for several months.
So Shouldn't we just cut bait and call it what it is, a depression. It took 49 months from the 2001 recession peak in jobs to get back to that level again. Just guessing here but I think it will take at least 168 months before we reach the level of jobs we had at the beginning of this depression (December 2007). For those that can’t do the math, that’s 14 years.
Contrary to popular belief this depression is just getting started.
Just for an historical prospective let’s look at a chart of cumulative job losses from all recessions since 1960.
The thing that strikes me the most about the above chart is the 1960, 1970 and 1974 recessions all had recovered their job losses from the peak within about 18-20 months. Include the 1981 recession with these 3 and you will notice that we didn’t spend a lot of time at the bottom in cumulative job losses. The 1981 recession’s cumulative job losses were certainly worse then the 2001 recession’s but the 1981 recession recovered it’s lost jobs in a little over half the time as the 2001 recession. With each recession since 1970 it has taken longer and longer to recover the cumulative jobs lost during the recession. Why is that? I don’t know.
One final observation looking at the above chart. How we can be at a 9.8% unemployment rate right now. In June of 2003 the unemployment rate was 6.3% when the largest cumulative job loss number (2.663 million jobs lost) occurred during the 2001 recession.
At the start of the 2001 Recession and the peak in jobs before the recession started the unemployment rate was 3.9% in December 2000. After 2.663 million jobs were lost between Dec 2000 and Aug 2003 the unemployment rate reached 6.3%. Now at the start of this recession in December 2007 the unemployment rate was 4.9%. And after 7.2 million jobs have been lost since the start of this recession the unemployment rate stands at 9.8%.
Let me see if I have this correct. During the 2001 recession, the unemployment rate increased by 61.5% after 2.663 million jobs had been lost. Now during this recession, the unemployment rate has increased by 100% after 7.2 million jobs have been lost. The unemployment rate during this recession has increased 40% more than the unemployment rate increased during the 2001 recession. Even though we have lost 170% more jobs during this recession than the 2001 recession. Can you smell the fish?
This next example is likely not accurate but it will give you a ballpark figure on where the unemployment rate should be.
61.5% / 2.663 Million = X% / 7.2 Million
(61.5% * 7.2 Million) / 2.663 Million = X%
166% = X or the percentage increase of the unemployment number for this recession.
So unemployment should have increased about 166% from December 2007 based on the percentage increase in unemployment and jobs lost in the 2001 recession.
This little exercise gives us an unemployment rate increase of
(4.9% * 1.66 = 8.13%)
Now add the two together 4.9% + 8.13% = 13.03%
13% unemployment would be closer to what the job loss data implies.
Unemployment Rate Data Source
PS. The second chart was originally published by Speaker Pelosi in March of this year When the cumlative job losses were slightly greater than 3.5 million.
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