How bad is this current recession compared to others in recent history?

[ringmastery]

early 90's, early 80's, 70's, etc.

[barbaraann]

1. My mom lived through the Depression and she says this is worse.

Everything is so much more expensive now and a lot fewer people live on farms that could at least provide food.

[papau]

2. Per Bush Stats the recession ended 11/01 - this is a Bush Boom!

:-)

[coloradodem2005]

3. Which makes it all the more depressing.

Boom has now become a relative word.

[Gunit_Sangh]

4. re: recession

Technically, we are not in a recession. The recession that we had in 2001 lasted only 6-9 months (March-October -- these may not be the exact months, I'm just too lazy to go look them up :o) and was a very shallow recession.

Since October, 2001, the economy has been expanding, slowly, but still expanding, so the current economic situation cannot be counted as a recession. What makes this expansion different from others is that jobs are not being created. Excuse me, they are being created, but just not in the U.S.A. If jobs were being created at the pace of Clinton's economy, we would have bounced back and be roaring by now (imho).

[ProfessorGAC]

11. You Took Econ 101 Didn't You?

This is a recession. Sorry if it doesn't fit your limited definition of one.

Full econometric analysis indicates that the growth rate of real GDP, rate of saturation of the employment market, productivity gains in excess of reduced employment levels, rate of exportation increase, and velocity of money are all in the bottom quartile of the last 65 years.

Economists who still rely on the old definitions are generally laughed off in the econ crowd in which i run. It's old fashion, it's statistically invalid, and shows a grotesque lack of understanding of how a macroeconomy actually works.

We hit this null in May of 2001. Not before Bush; during! Things have not improved since. Sept. 11 was a momentary blip, a special cause as it were, from which we recovered by February of 2002.

No excuses. We're in a recession. The fiscal situation in Washington is all that is propping up the GDP, and all the other valid indicators are negative.

Any questions?
The Professor

[Gulf Coast J]

13. You know more than the NBER?

Or is the NBER just a bunch of Bush operatives?

[ProfessorGAC]

17. Both

I have as many papers published on causative modeling of macroeconomies as the whole board. And, they are also bought and paid for.
The Professor

[Gulf Coast J]

21. Do they have any papers written on causative modeling of macroeconomics?

Or is their specialty elsewhere? These aren't stupid people who are coming up with the dates, yet you dismiss them because they lack your enormous intellect.

[ProfessorGAC]

23. Yawn!

I don't remember insulting you. What is your malfunction?

A lack of understanding as to how the macroeconomy works is not forgiveable, no matter their specialty. They are wrong. Half the economics community knows it. The other half still believe the antiquated principles. Sorry, if you can't grasp that i might actually know what i'm talking about.

You are dismissed.
The Professor

[Gulf Coast J]

28. I don't doubt you know what you are talking about

But when an anonymous poster dismisses the work of a group of individuals who have written extensively about business cycles, unemployment and other issues related to recessions, I tend to be skeptical.

Victor Zarnowitz is on the business cycle dating committee. Are you suggesting you have a better grasp of the business cycle than he does? If peer reviewed articles are an indication, I can't imagine anyone could beat him.
http://www.nber.org/vitae/vita551.htm

[ProfessorGAC]

33. Business Cycling Is A Specious Counter

Business cycles are an outcome of macroeconomic conditions, not a precursor. Businesses suffer downturns because of economic changes that affect consumer capability. That's how they're connected to the macroeconomy.

Business cycles are also affected, on a microeconomic basis, by the age of the product line. But, this is completely disconnected from the macroeconomic condition. It's a function of business and financial dimensions. Once again, unless a mature product line is now in a declining margin state, and there is no other product, anywhere, made by anybody to displace it (improbable or the product would not likely be in margin decline), it's not going to significantly affect the macroeconomy. Cannibalization by another firm will take place and create either an equilibrium, or product attractiveness will enhance volume and price, which results in growth. There are almost no logical negatives from such activity.

I admit i am not a believer in the business cycle. I believe the business cycle can be predicted from events that are inputs and crossfunctional levers of the macroeconomy. So, i tend not to pay attention to business cycle dating, as it seems to me to be dating of events that we should have already known were going to happen. Sort of like dating the rise of a pharma stock after they've announced they have found a 12 hour cure for the common cold. A "well, duh" sort of measurement.

So, no offense to Victor, but his opinion carries no more weight with me now that you've provided me with the link, than it did before i read it. I'm not an adherent to business cycle theory. It doesn't make sense to me and i don't agree that it is an inevitable. I believe business cycles, on a macro basis, are controllable based upon sound fiscal policy. We don't have that now, so the business cycle isn't leading the macroeconomy, it's simply an artifact of bad governmental policy.
The Professor

[BillZBubb]

16. Econ 101 or not,

isn't NBER the quasi-official authority on recessions? If we are talking in general about recessions, don't we have to stick to the NBER position?

It seems to me if we get into a situation where everyone can define recession by their own method, we'll have a hard time getting credibility with John Q. Public.

I do agree that deficit spending, not Shrub's idiotic tax cuts, are what is propping up this economy. It's as phony as a three dollar bill. But, then, so was the Reagan economy.

[ProfessorGAC]

18. I Will NOT Stick To A Definition I Can Prove Is Invalid

You can if you want. I won't. The definition, just like the thought process of far too many economists, is two dimensional. The macroeconomy does not operate in two dimensions.
The Professor

[brokensymmetry]

41. Yes, I have a question!

Does your econometric analysis give any indications of the future? Are there any positive trends visible, or is it just more of the same for the next few years?

[Media_Lies_Daily]

32. Technically, the NeoCons are cooking the books. IMHO,...

...we can't trust anything that comes out of that cesspool.

[loftycity]

5. Both my parents lived through the Depression and they say

it is worse. Worse because there is so much lying,deceit and delusion. Everyone is not pulling together. It is the isolation and the divide which will make it worse. They still cannot believe the Us(Rich) against them attitude.

And for me..this is the worst. I have my own business weathered the 80's and early 90's. This one is really bad. So many friends have gone under...basically from not getting paid by other companies.. trying to survive. Man has turned into a wolf on to another man.

[barbaraann]

15. You know, this isn't just a recession or a depression.

It's not a normal part of the business cycle--it's something far worse. It's a breakdown of the economic contract and a lot of people, including me, are terrified.

[smirkymonkey]

26. Bingo!

There are some unique aspects to this particular "downturn" or whatever you want to call it. Whatever it is, it has the potential to be disastrous.

The neocons have broken all the rules and continue to do so, most economic theories are assuming that a "rational person or persons" are a given when putting forth their hypothosies (sp?) however, what we have with this administration is a level of corruption and deceit so severe, that the theories are all upended.

It's all so f**ked.

[Cocoa]

6. it depends on the person

for some people, these are great times. Other people are losing everything.

[NewJeffCT]

7. We're not in recession, we're long into the jobless recovery

Recession started in Marchh 2001 ended in late 2001. Jobs should have started coming back in 2002, but they have not.

[noonwitch]

8. It's hard to judge it against the Reagan years

I haven't (yet) seen the amount of homeless people that I did in the 80s, but it may be that it just hasn't gotten to that point yet. The depression had to be awful, but we had FDR to lead us out of it. There seems to be a lack of hope out there.

[Robbien]

9. Hold on to your seats,

This ain't nothing yet. I fear the depression ride of our lives is just around the corner.

[Bandit]

10. Don't worry "Prosperity is right around the corner" ~ Herbert Hoover

Sound familiar?

[Misinformed01]

12. I think this is going to be worse than '29 for several reasons:

I say '29...I mean those years between '28 and what? 1937?

After the seventies, too many families started depending on having two salaries to maintain a lifestyle. One person loses their job in a 2 adult family, and that family can easily start drowning in debt.

And the debt load on adults today is just staggering....the credit cards, McMansion mortgages, SUV payments, cell phones, computers, cable, rising price of food, gas, electricity....

It's sobering as hell to think about what is actually going on in the US right now.

[recidivist]

14. We've gotten spoiled.

There have been (so far) two posters who report that their parents call the current climate worse than the Depression. I don't doubt the posters' reports, but the comparison is laughable. Ping me when we reach 25% unemployment and I'll reconsider that judgment, but until then, laughable it is.

What IS different today is people's attitudes. The boom and bust cycle used to be taken for granted. People lived with much greater economic uncertainty. That inclined them to take things in stride.

It is conventional to poke fun at the economists, but we DO seem to have learned something about economic policy since the 1930's, and the underlying economy has changed as well. Recessions have been getting progressively milder and shorter. Employment has shifted from agriculture and manufacturing to services. The government sector is larger. A majority of families have two incomes, which cushions against job loss. We are much wealthier, and that also cushions against adversity, at least in the short term. In addition, the economy is now so big and diversified that we seem to have sectoral rather than national recessions.

So why do so many people complain so loudly about the recent, by historical standards very mild, recession? I think many of us have come to take prosperity for granted. The last "hard" recession was 1979-82 (technically a couple of shorter, sharp recession straddling a weak recovery), and we've been off to the races ever since.

An early indicator of changed attitudes was Bill Clinton's success in 1992 in calling the very short, very mild recession of 1991 "the worst economy in 50 years." That too was laughable, but in a country intoxicated with the 80's boom, it resonated. From a long term perspective, we were basically on an 18 year joyride from mid-1982 to late 2000, and a whole generation came to think of boomtimes as normal. Now the kids are learning that there can be bumps in the road.

Even at the worst point of the recent recession, the economy was better than it was for most or all of the 1970's, at least in terms of employment, inflation, and interest rates. And -- oh my, the stock market bubble burst!!!! Since the Dow Industrials were 700-something in 1980, the recent retreat back under 10,000 needs to be taken with a little perspective. The kids need to study a little history before they get on the pity pot.

[Misinformed01]

19. Would you please explain to the people who have

lost their jobs that they are just a bunch of whiners?

While I agree with that we have become spoiled...you are assuming that all families are the good 'ol Ozzie and Harriet (except that now Harriet is a CEO of a small company! Or a manager)...

Give me a break. This economy is horrible and frightening. I am incredibly lucky; I heard Bush's name mentioned and started saving like hell...but, even I NEVER thought it would get this bad.

[area51]

20. "Ping me when we reach 25% unemployment ...."

What makes you think you can trust the lower than 25% unemployment nos. this republinazi administration is spouting?

[BillZBubb]

22. What a CROCK!

Talk about revisionism. Things are much worse today than the 1970's. Check out real GDP growth in the seventies compared to the Bush* years. Check out real personal income, which is the key item. Check out personal debt levels. Check out bankruptcies.

Your claim that unemployment, inflation, and interest rates were worse is also a stretch. Of course inflation and interest rates were higher in the 1970's, the country was in an inflationary cycle. So what? Real growth was substanial over the decade and personal income did well. As for unemployment, that's totally misleading since the 1970's didn't have a lot of 'under-employment' and not nearly the level of discouraged workers (dropped from the unemployment rate) as we have now.

And exactly what '80s boom? There was no boom. Real growth in the 1980's was less than the 1970's.

And even worse, thirty years after the 1970's the baby boom demographic is getting ready to retire. The country has all those unfunded liabilities that are about to come due. We are in a much worse fiscal position than anytime in the 1970's.

[Kathy in Cambridge]

30. '80s were a boom to the wealthy; lots of layoffs for the working person

I also just heard on the news today that forclosures are at their highest since the Depression.

We are in much worse shape. Real wages haven't kept up with the cost of living. I fear for my future, and everyone else's.

[recidivist]

35. I am very concerned with wage stagnation at lower income levels.

The chief reason for this is probably immigration. We import somwhere around 1.5-2 million people a year, mostly poor. This depresses wages for unskilled and semi-skilled jobs.

I am not anti-immigrant and don't want to close the borders, but I do think total numbers are important. I tend to think a reduction in immigration would help.

[recidivist]

34. Wow. It's been a long, long time ....

... since I encountered a fan of Nixon-Ford-Carter stagflation. Ah yes, those were the days ...

... Gas lines!!! What a wonderful way to get to know your neighbors!!!!

... Double digit inflation, WIN buttons, malaise, and who can ever forget the Misery Index -- ah, yes: borrow to the hilt, and let inflation cancel your debt!!!

... Japanese imports!!! Just think -- we shut down all those stinky auto and steel plants because they couldn't compete with the Japanese. Yes, three quarters of the folks in those industries lost their jobs, but what a gain for the environment!!!!

... A 21% prime rate and 17% 30 year mortgages -- and me looking to buy my first house!!! :(

When I was in high school, we were taught that the economists defined 3% as the frictional unemployment rate -- basically, full employment. By the time I was out of college, the sophisticated set was claiming that in a modern, mature economy, 6% was more like it. It didn't take us long to get habituated to the late 90's job market utopia (the Enron/WorldCom/.com IPO bubble economy, lest we forget), but the current employment situation compares pretty favorably to most periods in the last 30 years. FWIW, our unemployment rate now is about half of what the Europeans regard as normal.

Sure, we have problems. I'm sorry for anyone who has lost a job, and I worry about mine. As the old definition goes, a recession is when your neighbor loses his job, and a depression is when you lose yours. But as an old Hoosier who weathered the steel and auto industry downsizing of the generation past, the current wave of outsourcing is nothing new. Not pleasant, but nothing new.

The biggest problem right now, IMHLO (L=layman's), is the entry of China and India onto the scene. A big part of the difficulties we faced in the 70's and 80s was the adjustment to Japanese (and Taiwanese, Korean, et. al.) import pressure. This was a rude shock to an American economy that, after WWII, had grown fat and lazy in the absence of serious international competition. We adapted and survived.

Now China and India are coming on line. That's a problem, and an opportunity. I am as capable as anyone else of getting preoccupied with the near term problems, but since other posters have the doom 'n gloom position well covered, I'm inclined to offer a balancing opinion. We are not facing the end of the world. The integration of China and India into the global economy is not going to be easy, but there is a better, more prosperous world at the other end of the tunnel.

P.S. There is, of course, one other factor. This is a political board, which is great, but ....

You know, and I know, that if a Democrat were in the White House right now, most posters here would be defending this economy. Since Bush is in the White House, the partisan inclination is to run it down. The truth is somewhere in between.

[kcwayne]

39. I would love to go back to 18% money market rates

There was no way I could afford to buy a house in 1980 under those conditions, but now that I have made all my major purchases, and don't need credit, I would love to make 18% on my savings. It would beat the living hell out of Las Vegas, uh, I mean Wall Street.

[Robbien]

27. "Ping me" ? Did you forget that this is DU? "Ping" is FR slang.

Your theory also sounds a lot like the ones spouted there.

[Media_Lies_Daily]

31. Since you weren't in the Great Depression, and my Dad was...

...I'll take his word for it that this is far worse.

Maybe you need to study a little more history in terms of comparative values between the 1930s and current times. In other words, you have no idea what you're talking about.

[recidivist]

36. I know the difference between 5% and 25% unemployment.

n/t

[Media_Lies_Daily]

38. No, you know the difference in the numbers you're being fed....wise up.

[Skittles]

24. it is different compared to others

in the past, you never had the feeling that jobs had left the country for good, never to return.

[KayLaw]

25. Yes, Skittles

That's an important point. Something else that worries me is I fear some people I know personally are going to find out they are not as rich as they think. House prices in my area have risen dramatically and caused a lot of friends and family to think they're rich, and maybe they would be - if they sold their houses tomorrow. I feel the prices can fall just as dramatically as they rose and refuse to count my chickens before they hatch.

[Media_Lies_Daily]

29. I've been in four that I can remember since the 1970s...

...and this is by far the worst.

[cryofan]

37. here is what I know from experience

back in the 70s and 80s there were HELP WANTED signs on half the businesses. But in the last 4 years, I hardly EVER see a HELP WANTED sign (and I live in Houston).

Also, there used to be LOTS of engineering and technical jobs in the Technical Jobs section of the newspaper Help Wanted ads (and this was well before the Internet Bubble years).

What happened is that our leaders sold out our domestic menial shopkeeper type jobs to the third world immigrants (both legal and illegal), and then they sold out many of our white collar jobs to imported engineers (H1B and L1 visas) and to outsourcing.

I say we just hang 'em all in Washington Mall and get in a new bunch of politicos who know the consequences of economic treason.

[atre]

40. "Economic treason".... I like that.

Let's turn it into a new buzzword.