Ugh: The thin brown line, continued

Here’s an update of a graphic I linked to last month at Justin Fox’s Curious Capitalist blog at Time. Guess we can stop talking about 1981-82 as an analog for the mess today.

One thing I neglected to mention in Friday’s post about the March unemployment rate: January figures were revised to 741,000 jobs lost. The optimists suppose that may have been the bottom; the pessimists are awaiting further February and March revisions.

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Comments (7)

  1. Submitted by Glenn Mesaros on 04/06/2009 - 08:57 am.

    James K. Galbraith said recently:

    The deepest belief of the modern economist is that the economy is a self-stabilizing system. This means that, even if nothing is done, normal rates of employment and production will someday return. Practically all modern economists believe this, often without thinking much about it. (Federal Reserve Chairman Ben Bernanke said it reflexively in a major speech in London in January: “The global economy will recover.” He did not say how he knew.) The difference between conservatives and liberals is over whether policy can usefully speed things up. Conservatives say no, liberals say yes, and on this point Obama’s economists lean left. Hence the priority they gave, in their first days, to the stimulus package.

    But did they get the scale right? Was the plan big enough? Policies are based on models; in a slump, plans for spending depend on a forecast of how deep and long the slump would otherwise be. The program will only be correctly sized if the forecast is accurate. And the forecast depends on the underlying belief. If recovery is not built into the genes of the system, then the forecast will be too optimistic, and the stimulus based on it will be too small.

    Consider the baseline economic forecast of the Congressional Budget Office, the nonpartisan agency lawmakers rely on to evaluate the economy and their budget plans. In its early-January forecast, the CBO measured and projected the difference between actual economic performance and “normal” economic performance — the so-called GDP gap. The forecast has two astonishing features. First, the CBO did not expect the present recession to be any worse than that of 1981-82, our deepest postwar recession. Second, the CBO expected a turnaround beginning late this year, with the economy returning to normal around 2015, even if Congress had taken no action at all.

    Watch Larouche webcast on April 11 at 12 noon for a full explanation of the current Great Depression.

  2. Submitted by Eric Larson on 04/06/2009 - 09:11 am.


    I like the chart. It gives some information. But it does not give the key data. What is the un-employment rate? Now-1982-1974-13932 etc. That is the key figure. It is most comparable over time.
    Losing 2 million jobs sounds like a lot compared to lets say 1.4 million jobs 27 years ago. But we must take into account the population may have increased from 225 million to 300 million. So totals are harder to compare. The % of un-employed is a better measure. That’s why we should all act up when the Labor Dept. changes the way they measure un-employment or how they define it.

  3. Submitted by Susan Lesch on 04/06/2009 - 09:59 am.

    Mr. Perry, I wonder if you know anyone at CNBC and could please ask them to remove the “life sign” live display of the U.S. stock market tally while Mr. Obama and others are speaking. CNBC seems to think their viewers see a causal relationship between his words and the total (that is nonsense).

  4. Submitted by Tony Wagner on 04/06/2009 - 10:42 am.

    Eric Larson:

    The vertical y-axis in the graph is labeled “percentage decline in employment,” NOT raw unemployment totals.

  5. Submitted by Annalise Cudahy on 04/06/2009 - 02:13 pm.

    You neglected the Depression following the Panic of 1893, which we are very much following in nearly every measure (decline in money supply, decline in GDP, and unemployment) except we are moving much faster through the process.

    It makes no sense to follow a Recession that is not based on a complete collapse of credit, and the Recession of 1982 was not. This is much more like 1893 than anything else. Yes, it was a long time ago and yes, our economy is very different. But it’s tracking awfully well all the same.

    It’s a Depression, a particular type of economic slowdown which also can be described as a “Kondratieff Winter”. You should look to similar events, rare as they are in our history.

  6. Submitted by dan buechler on 04/06/2009 - 04:01 pm.

    It is very interesting to see how the 1974 and 1980 recessions were much shorter lived (short and sharp an graph) Of course in those days 30 years ago you had a much different government approach and a less flexible workforce than today.

  7. Submitted by Steve Titterud on 04/06/2009 - 05:10 pm.

    Another factor in comparing the 70s and 80s with today is the level of consumer debt, which magnifies the impact of unemployment. It is substantially higher today. has an interesting analysis and well-cited information sources showing graphic comparisons of the levels of U6 & U3 since 1900 (doesn’t go back to 1890s, though), and includes a depiction of the rise in consumer debt per person since 1952.

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