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Recession Analysis
The Employment Growth Rate is the easiest way to gauge how
easy or
difficult it is to find a
job. Employment growth is the rate of change for any given month
compared to 12 months earlier. This eliminates seasonality.
When employment growth (blue line) is above the Workforce
Growth rate (green line), it is easy to find a job because
employment is growing faster than the workforce can supply
workers. The longer employment growth remains above the
workforce growth, the easier it becomes. For example, in the
1990s, employment growth was higher than the workforce growth
for 8 years in a row. In fact, in the late 1990s, almost anyone
could easily find a job right away.
Notice in the graph below that our current recession bottomed
out in July 2009 at -4.95%. By comparison, the recession of 1949
bottomed out at -5.01%.
In other words, this has been the deepest recession since
1949.
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Recession durations
The official periods of recession are shown in the
graph above as red lines.
The start, end and duration of each recession is shown
in the table on the right.
Notice from the graph above that all previous
recessions officially ended at or just before the lowest
point. If this pattern holds true today, our current
recession ended in July 2009 or just before and has
lasted 19 months at most.
In other words,
this has been the longest recession since the
Great Depression.
However, one could argue that the back-to-back
recessions in the early 1980s (see the graph above),
taken together, lasted longer. These two recessions together are often referred
to as the "W-Shaped" recession and have been the only
time this shape occurred in our recorded history.
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Recessions since 1940 |
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Start |
End |
Duration |
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Feb 1945 |
Oct 1945 |
8 months |
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Nov 1948 |
Oct 1949 |
11 months |
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Jul 1953 |
May 1954 |
10 months |
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Aug 1957 |
Apr 1958 |
8 months |
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Apr 1960 |
Feb 1961 |
10 months |
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Dec 1969 |
Nov 1970 |
11 months |
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Nov 1973 |
Mar 1975 |
16 months |
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Jan 1980 |
Jul 1980 |
6 months |
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Jul 1981 |
Nov 1982 |
16 months |
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Jul 1990 |
Mar 1991 |
8 months |
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Mar 2001 |
Nov 2001 |
8 months |
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Dec 2007 |
Jul 2009 |
19 months |
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Patterns worth noting
There are several patterns worth noting from the
graph on the top of this page.
- Deep recessions recover quickly. If history
repeats, we will be adding jobs by Summer and
exceeding the Workforce Growth Rate by Fall.
- Deep recessions cycle quickly. This is worrisome
for the recession of 2008 and 2009.
- Shallow recessions take longer to recover -
especially the last two in 1991 and 2001.
- Our current employment situation has been
getting better for 11 months in a row, even though
we're still losing jobs. Finding a job is getting
easier. However, we still have a long way to go
before we put everyone back to work.
- The only time we've had a W-Shaped recession was
the early 1980s, and the first part was very shallow -
barely dipping below zero employment growth. It
seems unlikely that our current recession will
double-dip because it was so deep - in fact, none of
the deep recessions were W-Shaped.
Lessons
learned (looking back)
Our most recent recession that started in December of
2007 was not announced or made official until one year
later, in December 2008.
Looking back at the patterns of recessions from the
graph on the top of this page, it was abundantly clear
for at least the last half of 2008 that we were in a
recession, just by looking at the employment growth
rates. We should learn from this.
Ditto for when this recession ended.
The take-away
Employment Growth Rates are the easiest and fastest
way to quickly grasp our employment situation and how
easy or hard it is to find a job. You will find these
growth rates color coded throughout JobBait to make it
even easier.
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