In the article, The recession is officially over, I take a look at the devastating impact the worst contraction since the Depression has had on the labor market, comparing job losses over the past couple of years with those in the steep recessions of 1973-75 and 1981-82.
Although the economy is no longer in a recession, according to government data, enthusiasm among most of us remains subdued amid still-high unemployment and the fog of uncertainty that continues to hang over the economy.
In order to graphically demonstrate what’s happened since the end of the recession, I’ve put together a chart that looks at how nonfarm payrolls have performed following the end of each recession since 1975, save the short recession of 1980.
(click chart to enlarge)
The 16 month declines in economic activity during 1973-75 and 1981-82 were difficult times for the U.S. economy. But as is typical of nasty recessions, the economy bounced back nicely, creating conditions that were very favorable for hiring.
In contrast, the milder recessions of 1990-91 and 2001 were followed by mild recoveries, producing what have been called “jobless recoveries.” Unfortunately, that’s what we are seeing today.
Looking at the data since June 2009, employment didn’t bottom for another six months (month 7) and remains over 300,000 jobs below the level reached when the recession was officially declared to have ended.
This has been an atypical recovery following an atypical recession – one brought on by a financial crisis and not from an overly tight monetary policy.
Consumers and businesses continue to hold back, which has given us a sluggish expansion. Consequently, companies remain reluctant to add to payrolls, putting this recovery just ahead of the feeble gains experienced after the 2001 recession ended.
The graph below provides a closer look at how the job market performed during the 1991, 2001 and 2009 recoveries.
(click to enlarge chart)
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