Thursday, February 12, 2009

US recession - Febuary update - still bad

In January I blogged about a graph on US employment comparing all postwar recessions. My thoughts basically came down to - "So employment held up well early but it’s going to get uglier than in living memory and looks like living up to the “worst post war recession” hype." "

See the updated graph for the Federal Reserve here.

Basically employment continues to worsen at the same rate as the previous few months as I expected so things still look grim.

Interestingly the other graphs on the link above also show that output actually kept growing during the early stage of the recession - this has a lot to do with countries the US exports still having good growth up to mid 2008 and this coupled with the low US dollar meant US exports were still booming up to mid 2008. As the recession has spread worldwide, and the US dollar rallied, this export boom has turned around dramatically so output in now decreasing.

The longest USA post WWII recession has been 16 months. So far this one has lasted 13 months and so there is little doubt that this one will be longer. It also seems likely that the decrease in employment will be higher than any other post WWII recession. This is troubling as it suggests a somewhat different (and more damaging) dynamic in this recession than other recessions. The global nature of this recession is no doubt a large part of this and a negative for the short term while the twin consumer and government debt burdens are also troubling from a medium to longer term perspective.

Given unemployment started from a low level there is some hope it may not peak at much above 10% which at least gives some hope for a situation that may not be too disastrous in terms of people's lives and social cohesion even if output growth is slow after the recession and unemployment fails to decrease for some years.

No comments:

Post a Comment