Comments on: Comparing this recession to the last five http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/ Commentary on the economy, the markets, and business Sat, 05 Dec 2009 05:18:44 +0000 http://wordpress.com/ hourly 1 By: O'Maolchaithaigh http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12921 O'Maolchaithaigh Wed, 11 Feb 2009 06:32:10 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12921 If it means anything, the curve of the current job losses (as a percent) is steeper than any of the others over a similar 9-month time period, and doesn't even show a change in slope. That is disturbing, but, I would think, impossible to predict what's next from that. If it means anything, the curve of the current job losses (as a percent) is steeper than any of the others over a similar 9-month time period, and doesn't even show a change in slope. That is disturbing, but, I would think, impossible to predict what's next from that.

]]> By: plukasiak http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12894 plukasiak Tue, 10 Feb 2009 13:49:23 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12894 bryan -- I'm not so sure that job losses are now a lagging indicator. Caterpillar had a record sales year in 2008, and enjoyed hefty profits, yet laid off 20,000 people (IIRC 20% of its global work force.) Companies aren't waiting to cut jobs, they seem to be doing so pre-emptively in order to maintain profit margins. _ As to the chart -- I think it highlights the differences between "cyclical" and "externally created" recessions. The "deep" recessions are all externally created -- 1974 was caused by the oil embargo, and 1981 was caused by Greenspan raising interest rates. In both cases, the same forces that created the recessions brought about the end of them -- OPEC started selling us oil again, and Greenspan brought rates down. _ The current downturn resembles an "externally created" recession, but there is no entity that can end it -- its structural, and there is no OPEC or Greenspan that can simply change policies and get the economy moving again. _ IMHO, this looks most like the Depression -- another "structural" downturn. And its going to be the kind of thing that is best served by "waiting it out", and spending money to reduce the impact on those affected, rather than trying to shore up the structures that are inherently unsound. bryan -- I'm not so sure that job losses are now a lagging indicator. Caterpillar had a record sales year in 2008, and enjoyed hefty profits, yet laid off 20,000 people (IIRC 20% of its global work force.) Companies aren't waiting to cut jobs, they seem to be doing so pre-emptively in order to maintain profit margins.
_
As to the chart -- I think it highlights the differences between "cyclical" and "externally created" recessions. The "deep" recessions are all externally created -- 1974 was caused by the oil embargo, and 1981 was caused by Greenspan raising interest rates. In both cases, the same forces that created the recessions brought about the end of them -- OPEC started selling us oil again, and Greenspan brought rates down.
_
The current downturn resembles an "externally created" recession, but there is no entity that can end it -- its structural, and there is no OPEC or Greenspan that can simply change policies and get the economy moving again.
_
IMHO, this looks most like the Depression -- another "structural" downturn. And its going to be the kind of thing that is best served by "waiting it out", and spending money to reduce the impact on those affected, rather than trying to shore up the structures that are inherently unsound.

]]> By: Justin Fox http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12879 Justin Fox Mon, 09 Feb 2009 20:42:12 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12879 @bryanfromhouston: The unemployment rate is a lagging indicator. I think payroll employment is a coincident one. @bryanfromhouston: The unemployment rate is a lagging indicator. I think payroll employment is a coincident one.

]]> By: bryanfromhouston http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12878 bryanfromhouston Mon, 09 Feb 2009 20:33:35 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12878 Quick question? Job losses tend to be a lagging indicator right? Or has that changed over time due to the speed of our information flow? That would be neat to see as graphed on maybe a GDP bar chart. Quick question? Job losses tend to be a lagging indicator right? Or has that changed over time due to the speed of our information flow? That would be neat to see as graphed on maybe a GDP bar chart.

]]> By: Justin Fox http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12874 Justin Fox Mon, 09 Feb 2009 20:09:20 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12874 @spencerengland: Polley's chart for 1981-1982 appears to be identical to mine--a cumulative drop maxing out at 3.1%. Your chart uses the household survey numbers, right? So it should be no big surprise the two don't exactly agree. @spencerengland: Polley's chart for 1981-1982 appears to be identical to mine--a cumulative drop maxing out at 3.1%. Your chart uses the household survey numbers, right? So it should be no big surprise the two don't exactly agree.

]]> By: spencerengland http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12871 spencerengland Mon, 09 Feb 2009 19:48:32 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12871 I've been doing this chart after every employment report for several months at angry bear. But I think you 1981 data is wrong. My data from BLS does not show that severe a drop in 1981. Bill Polley's charts does not agree with you either. I've been doing this chart after every employment report for several months at angry bear.

But I think you 1981 data is wrong. My data from BLS does not show that severe a drop in 1981. Bill Polley's charts does not agree with you either.

]]> By: bryanfromhouston http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12869 bryanfromhouston Mon, 09 Feb 2009 19:43:26 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12869 jeremiah, - What would be considered key legislation? Would the highway bill of '05 count? What about the prescription drug add-on for Medicare? Further, how would one isolate the policy initiatives from the Fed's monetary actions? I suppose one could attempt to do a large graph but that is a lot of work even for one as smart as Justin. jeremiah,
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What would be considered key legislation? Would the highway bill of '05 count? What about the prescription drug add-on for Medicare? Further, how would one isolate the policy initiatives from the Fed's monetary actions? I suppose one could attempt to do a large graph but that is a lot of work even for one as smart as Justin.

]]> By: jeremiahnelson23 http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12866 jeremiahnelson23 Mon, 09 Feb 2009 18:57:01 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12866 It would be nice to see on this graphic bullets of the key legislation (if any) that targeted the recession, to help determine the relationship between legislation and return to normalcy. It would be nice to see on this graphic bullets of the key legislation (if any) that targeted the recession, to help determine the relationship between legislation and return to normalcy.

]]> By: greenlyfe http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12863 greenlyfe Mon, 09 Feb 2009 18:33:02 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12863 At what point does a recession become a depression; and will it take the goverment a year later to declare it as it did this current recession? Thank you. Also, what factors do you think played in making the recovery from the 2001 recession so anemic? I think the mistake we made was cutting taxes the same time we went to war; but maybe the tax cut was what gave us any recovery? It kinda looks like they were simply a bandaid that stopped a full correction from occurring. At what point does a recession become a depression; and will it take the goverment a year later to declare it as it did this current recession?

Thank you.

Also, what factors do you think played in making the recovery from the 2001 recession so anemic? I think the mistake we made was cutting taxes the same time we went to war; but maybe the tax cut was what gave us any recovery? It kinda looks like they were simply a bandaid that stopped a full correction from occurring.

]]> By: Joe Bftsplk http://curiouscapitalist.blogs.time.com/2009/02/09/comparing-this-recession-to-the-last-five/comment-page-1/#comment-12857 Joe Bftsplk Mon, 09 Feb 2009 16:48:07 +0000 http://curiouscapitalist.blogs.time.com/?p=4207#comment-12857 Looks like the previous administration's policies have given us an object lesson in how to extend a recession, or at least in how to keep a recovery from helping the labor force. So I'm all for trying something different. Looks like the previous administration's policies have given us an object lesson in how to extend a recession, or at least in how to keep a recovery from helping the labor force.
So I'm all for trying something different.

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