Where did all the jobs go...and when are they coming back?

More evidence that the most recent recession/recovery is a of a different nature than most. This graph shows the percent decline in employment levels over time for each recession since 1948. Not only has the 2008 recession had the greatest percentage decline, but it also appears that we will not return to the prerecession peak for some time. Notice the shape of the 2001 and 2008 trends vs the rest of the recessions shown. 2001 was not nearly as deep as some of the others, but it took a lot of time to get back to the previous peak. It looks like the Great Recession got the worst of both worlds.

Here is the original graph from McKinsey. They suggest an alarming trend, but I am waiting to see what happens in the next recession (although I'm hoping that isn't for at least another 10 years. If it is also followed by a jobless recovery, then I'll agree we are in serious trouble.

See my previous posts about the jobless recovery here and here. I'm not actively in the job market right now, but is anyone seeing signs of life out there?

HT D.O

It's All Relative - The 2009 Recovery

Here is an informative graphic from the WSJ comparing the recent recovery to all other recoveries since WWII. (Click the picture to enlarge.)

There are several striking things about the recovery that started in June 2009. It is a jobless recovery, bank lending is abnormally low, home prices have tanked (and are continuing to decline on average), and disposable personal income is recovering more slowly than in all previous post-WWII recoveries. I know the graphic is from several months ago, but I believe that most of these general trends have not changed much since then.

HT Dr. Snowden for sharing these graphs to motivate discussion of business cycle theory.

Monetary Economics Links

With the United States debt ceiling debate coming to a head, the recently released downward revisions of GDP data from the last few years, and talk of a second recession (or that there was never a recovery in the first place), I have been reading more than usual about monetary policy and macroeconomics. Here are some articles, posts, and other stuff I have been reading and found interesting enough to share here.

The "little depression" just got bigger by Brazilian economist Marcus Nunes

Recessions compared by GDP % change and employment % change

Greg Mankiw thinks Bernanke and the Fed have done a decent job

Scott Sumner on thinks Mankiw was too easy on Bernanke and that he should work for the Fed

Tim Harford's clever debt ceiling analogy

A letter to Timothy Geithner on what could happen if the debt ceiling isn't raised

NPR Planet Money Podcast: Would US credit rating downgrade matter?

Matt Yglesias on the difference between Inflation Targeting vs Price Level Targeting

Paul Krugman thinks more government spending is needed (I disagree, for long term concerns. Perhaps the optimist in me believes there are other ways to stimulate the economy... For starters, how about addressing all of the uncertainty related to the debt ceiling debate.)

Paul Krugman rips on the Maestro

Update: Tyler Cowen defends Greenspan

Apple has more cash in reserves than the US Treasury (this is all over the place a popular news story right now, but still amazing)

Update: A somewhat pessimistic view of the Sunday debt deal by Ezra Klein

I realize this compilation is somewhat all over the place, but it is worth reading.

Corporate Profits Recover as Individuals Struggle

While corporate profits are recovering nicely, wages and salaries are stagnant. Check out recent posts at the Curious Capitalist here and Freakonomics here about how the current economic recovery strongly favors corporations and stockholders. The posts are based on this study from Northeastern University. The Great Recession differs greatly from recessions of the past, as does the current recovery.

To date, through the first quarter of 2011, the nation’s recovery from the 2007-2009 recession is both a jobless and a wageless recovery. (p. 23)

And here is a table comparing the current recovery to previous ones. (click to enlarge)

Center for Labor Market Studies, Northeastern University (p. 20)

 Hopefully, the recovery of jobs and wages will come with time, but how long this lag will be is debatable. Keep in mind, this recession was largely due to the sub-prime mortgage crash  - and resulting drop in home values - which is very different from prior recessions.