Economics, U.S. Economy

The gaping maw that ate the U.S. economy

From the NY Fed:

The first figure shows how these three labor market variables evolved over the four post-1973 business cycles (excluding the short 1980 cycle), along with developments in the Great Recession and current recovery. We start at the lowest level of the unemployment rate before the recession and then follow the changes for three years after the rate reaches its maximum level. For the current expansion, the maximum unemployment rate occurred in October 2009.

The employment-to-population ratio displays a classic V-shape recession and recovery pattern in the 1970s and 1980s. In the recession and recovery of the early 1990s, however, the employment-to-population ratio instead displays a U shape, only returning to its pre-recession level three years after the peak in the unemployment rate. In the recession and recovery of the early 2000s, neither the participation rate nor the employment-to-population ratio returns to its previous level, so we see an incomplete U-shape pattern.

In the most recent cycle, the employment-to-population ratio traces out an L shape, but the unemployment rate falls because the participation rate declines substantially (a much more gradual decline was expected by many given the aging of the baby boomers); in other words, a larger share of the population is out of the labor force rather than participating and being unemployed.

Good thing the Obama White House pivoted to healthcare reform after passing the stimulus. It’s work was done.

10 thoughts on “The gaping maw that ate the U.S. economy

    • no, its proof the financial crisis was a very deep one, and it proves once again that financial crisis make for slow recoveries.
      the disastrous flop was the deregulation that made this crisis possible by inflating such a massive financial bubble.

    • actually: notice how it all collapses just as bush and the GOP are set to leave.

      unless you think Pelosi and Reid are miracle workers that can inflate and burst a MASSIVE financial bubble in 2 months, then this collapse can only be attributed to the bubble GOP economic policy created.

  1. The last comment completely misses the massive collapse of GDP in this recession relative to what occurred in the prior 4 recessions. I suggest you look for a calling other than economics.

  2. Looking at the 80s figures, how can the unemployment rate be negative? From ’83 until ’85, we had so many jobs that everyone had more than one?

  3. How is this proof that Kensyian is a flop? Whether I support the concept or not, it seems to me tobe saying a very different thing. Or things. For instance, perhaps a lot of baby boomers lost their jobs and are old enough that reacquiring jobs is proving to be tough. Perhaps industry has improved efficiency (ie productivity) and fewer job holders are needed? Perhaps the nature of our industry is changing and the jobs those older workers held are not as needed as they were? Perhaps a lot of these workers are machinests and machines are more automated now?

    You know, politics isn’t really the problem. The color of the Pres’s skin isn’t the problem. The problem is that Americans, many of them, have decided that they don’t need an education (in fact have been making this decision for years) and aren’t all that employable. On top of that, the immigrants we need to keep our population from aging as fast as other country’s are being discriminated against out of fear for our own jobs, when really they will help create jobs into the future.

    I have been feeling for years that the previous several recessions were “cured” way to fast, band-aided in fact. Those recessions weren’t cured. We simply rotated the economy into different sectors without fixing the previous.

    The problem is that Congress (ie the voters) would rather be re-elected (ie lower taxes regardless of the wisdom) than actually think about things. Blaming others for our own short sightedness is nothing but more short sightedness.

  4. So that means at the end of the Bush administration, that administration destroyed the economy and it was spiraling downwards. And then when Obama took the reins, he stopped the continual drop and the economy is now slowly recovering. We better make sure to hire Obama for the next election. Thanks for the tip.

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