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Friday, August 03, 2012

The Jobs Report

From Bloomberg, April 12, 2012:

Five Years After Crisis, No Normal Recovery 

...After systemic financial crises, however, economies of the postwar era have needed an average of four and half years just to reach the same per capita gross domestic product they had when the crisis started. We find that, on average, unemployment rates take a similar time frame to hit bottom and housing prices take even longer. With the Great Depression of the 1930s, economies on average needed more than a full decade to regain the initial per capita GDP.
After the Fall,” a 2010 paper written by one of the authors of this article and Vincent Reinhart, a former Fed official who is now chief U.S. economist at Morgan Stanley, added evidence that in 10 of 15 severe post-WWII financial crises, unemployment didn’t return to pre-crisis levels even after a decade. It also showed that in seven of the 15 crises there were “double dips” in output.
What’s the best way to accurately calibrate recession and recovery after a deep financial crisis? It isn’t enough simply to establish when per capita GDP growth resumes, as economists have traditionally done to mark the end of a conventional recession. As we emphasized in our book, “This Time Is Different,” it is essential to measure where an economy stands compared with pre-crisis levels of important variables such as output, unemployment and housing prices.
There also is the interesting question of whether, after a deep financial crisis, an economy will ever fully reach its earlier trajectory for trend GDP, or whether some output capacity is lost forever. Researchers at the Organization for Economic Cooperation and Development found that the most likely scenario involves some permanent loss, though extrapolations over long time periods -- a decade or more -- are necessarily subject to a high degree of uncertainty.
 There is a lot of interesting material in this article. There was a good-sized recession, and there was a severe financial crisis. Personally, after the first ten years of the 21st century, I would never trust a politican of any sort again.

If we continue to act like under-educated fools, we will barter our futures for nonsensical political beliefs.


Baysage said...

But, my friend, the vast, vast majority of us are uneducated fools. Alas.

Anonymous said...

I love this blog. Remarkable.
A sublime human being, I venture to think.

Montag said...

A fair observation....

Montag said...

But we should at least pretend... like I do a lot of the time.

It's like in The Wizard of Oz, we needn't actually have big brain pans and lots of grey matter...
we just need to act as if we did.