Monday, January 3, 2011

The Great Recession, 2008 - ???

"So, for example, the country was into recession right after I was sworn in, a dot-com bust had taken place. Then the attacks of September the 11th, and then of course the great financial meltdown - the fundamental question facing any presidency is how do you deal with the hand you're dealt?"
George W. Bush

May we all be dealt a better hand in 2011. In 2010 we may have reached the bottom of the Great Recession but we are still in for a long recovery period.

click to enlarge

This graph from CalculatedRisk shows the percent of jobs lost in each recession since 1948, relative to the peak of the pre-recession job market. In terms of the percent of jobs lost, the current recession is by far the worst we’ve seen since World War II.

I have a friend who is an economics professor. He said the Gross National Product (GNP) is nearly back to a pre-recession level. This means most companies have succeeded in restoring revenue without hiring back employees fired or laid off. It's called a jobless recovery.

Bottom Line

From the graph above, it looks like only the 2001 recession has lasted as long as the current one, but the impact on employment was much less then. There are many articles online stating that current government policy during this recession, from health care, to tax law, to environment regulations have discouraged corporate growth and new hiring.

So what about the Trillion dollar stimulus package? Did it help create jobs? Counting back from November 2010 in the graph to January of 2009 when Obama began his office as President, the red line was just crossing 2% line. It fell an additional 4% over the past two years despite the Stimulus. The brief upwards dip in the graph last year came for hirings for the 2010 census. So there is no evidence that the Stimulus helped at all.

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