Chart of the Day: Depth and duration of jobs crisis

Earlier in the week I showed you one way to look at the jobs crisis in graphical form. Here’s another from Calculated Risk.

Depth and duration of jobs crisis

The very real possibility that we will slip into recession prior to regaining the previous jobs peak casts the current situation in an even darker light than that of Federal Reserve Governor Sarah Raskin. Not only is the depth and duration of the unemployment crisis immense, but so too are the long-term consequences. The failure to design a coordinated package of monetary and fiscal policy to engineer a V-shaped employment recovery looks increasingly like a massive lost opportunity. And with that opportunity now lost, a return to even something sort of like the pre-recession jobs trend seems essentially impossible.

Tim Duy, The Lost Jobs Opportunity

I think that’s about right. As I have said previously, “unemployment will be higher and stocks will go lower than in 2009. I am convinced that it is politically unacceptable to have the government propping up the economy as Koo suggests it should. The question now is one of timing: when will the government stop propping up the economy?

Am I being too negative or just realistic?

Also see: What is a double dip recession?

1 Comment
  1. David Lazarus says

    If the government stops propping up the economy and goes into austerity then watch the unemployment figures tank significantly over the next three years. Fed policy will only impoverish savers who will have to cut back spending further, as their interest income is eliminated. I have seen this graph before and have noticed that even the only prior world recession since WWII was in 1974 and that was short by comparison.

    The problem has been that supply side policies have meant that the Fed cuts rates to boost the economy but Congress has been emasculated of any influence over the economy. So while wasteful deficits have been allowed to acrue to fund the wars while allowing the nations infrastructure to collapse has been typical. Then add in deliberately inept stimulus then you have the making of the next depression. The US will probably raise its credit limit but will probably destroy the welfare system and medicare. Though the results might not be noticed for years as US life expectancy falls substantially and it resembles a third world banana republic for most and a few living the life of luxury like any befitting third world nation.

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