Oh, Those Pesky Economists
This Isn’t the First Recession, Nor the Worst… So Far
It's important to look at the data.By Robert Struckman , 1-09-09
 |
|
 | |
|
This painful economic cycle may end a 30-year stretch of moderate ups and downs, but it’s about average compared to the worst 10 recessions since World War II.
That’s one lesson immediately apparent after checking out the graphs and statistics on a new Web page on the site of the Minneapolis Federal Reserve Bank.
“Our main reason wasn’t to push any line,” explained senior economist Terry Fitzgerald. “But it’s important to look at the data and keep things in perspective.”
Accurate comparisons are hard, because the current data can seem like a constantly moving target. Employment numbers and other data get released and then revised. Some offers glimpses of good news. Others seem to dash those hopes. Fitzgerald said he’ll do the only thing possible, which is to constantly revise and extend the numbers, as new information comes in.
Still, while the economy could always get dramatically worse, the numbers so far seem roughly comparable to a number of recessions, not the Great Depression.
In the midst of some of those recessions, employment numbers took a serious dive. Considering the dire employment figures over the past four months, it’s easy to imagine how people must have felt in 1973, when employment crept up almost 1 percent and then dropped 3 percent.
“It can feel like Doomsday,” Fitzgerald said. “This is a pretty substantial recession, but it might feel worse because we really haven’t seen a large recession for 30 years.”
So far this recession looks a lot like the downturns in 1981, 1973 and in the 1950s, he said. There is no data yet to suggest it’s worse than a typical medium-to-strong recession.
And the economy needs downs as well as ups, Fitzgerald said. The economic term for it is “reallocation of resources.”
“We’re in a big creative-destruction process. It’s important that it happens. It’s painful, and we want to help people through the process, but there was too much money in housing and the financial markets, and this keeps us on a long-term path growing,” he said.
At the end of our interview, I asked Fitzgerald why he didn’t put economic numbers from the 1920s and 1930s on the graphs.
“People would have thought I was cheating,” he said, “It’s an order of magnitude larger than anything you see here. The line would have immediately shot off the bottom of the chart.”
Like this story? Get more! Sign up for our free newsletters.
Comments
you won't find the truth by copying down the lies of bank regulators who use bureauspeak to cover their asses. the truth is in the street, off the beaten path- and away from these guys. but that might entail actually talking to real people- something that journalists have forgotten how to do. easier to just copy down some econospin from the prepared statements of the ones who got us here in the first place.
The government cannot create jobs. The government itself has no wealth nor capital, only debt. The interventions the government and federal reserve have performed against the wished of the people for the past year have done nothing. Since the bailouts the markets have lost over 25% more. As those in the Austrian School of economics have told us and taught us, the bubbles created by the Federal Reserve will burst eventually, and with furious anger! The interventions of the Fed and treasury dept. will only prolong and worsen the situation. Our recession may soon be GDII (Great Depression Two).
Please do not take my word for any of this. Do your own research and reading. Listen to Peter Schiff, Professor Antal E. Fekete, Ron Paul, Paul Craig Roberts, Darryl Schoon, Catharine Austin Fitts, Lew Rockwell, Jacob Hornberger and those like them. Have a good year. Buy some gold.
Argentum et aurum comparenda sunt.
The truth is, there are some problems that can only be solved by government. Which is not to say that government will (ever) succeed in the attempt.
For my part, I will predict that buying gold now is every bit as stupid a move as it has been for 90+% of the time. If you go with whiskey, at least you'll be able to forget about how stupidly you threw your money away.
That's an indicator, of course. The slope can change quickly.
But rather than looking in the rear-view mirror to see how many tire tracks point off the road and into ditches, it is important to look where we are, and where we're pointed. For tax avoidance and mining cheap labor, we've shipped our manufacturing capability off-shore. (Fortunately, the Germans and Japanese have done some of that too, and invested in some of our cheap labor down south.) To increase productivity, we've built an economy dependent on very cheap energy.
Substantial dislocations as the repurcussions of the those decisions, as well as the chickens from the spent bubbles of internet connectivity and make-money-fast housing come home to roost.
That being said, most commerce oriented people would also say this is really not such bad times!