When we compare the job losses associated with the Great Recession to other economic downturns, the political world will often measure up this recession to the rest of the U.S. recessions in recent generations. This kind of evaluation, however, may not be ideal.
This Calculated Risk chart, for example, shows the job losses connected to every American recession since World War II. That red line highlights the recession that began in 2007, and helps show how much more severe this downturn is than anything we’ve seen in the post-Depression era.
The problem, of course, is that the Great Recession isn’t just worse than all modern American downturns; it’s also a different kind of recession — this one, like the Great Depression, was the result of a financial industry collapse. With this in mind, the Oregon Office of Economic Analysis this week posted a different item, showing job losses associated with financial crises around the world, and by this point of comparison, “the U.S. labor market has performed better than 4 of the previous Big 5 crises.” (via Ezra)
I realize, as a political matter, this kind of information is cold comfort. No one, least of all those struggling most, really wants to hear, “It could have been worse” or “Swift action prevented a more serious disaster.”
But for the sake of understanding and comparing, facts are facts. As brutal and devastating as the Great Recession has been, a combination of steps from policymakers, including the stimulus, the auto industry rescue, and even TARP — all steps the right finds offensive — stabilized an economy teetering on the brink of collapse. As the second chart helps show, we even started recovering faster than other countries facing similar circumstances.
Voters may not care, but it’s worth pointing out the truth from time to time anyway. As Bill Clinton explained on “Meet the Press” last weekend, “First of all, he became president just a few months after the financial crash. Now, keep in mind, even before the financial crash, in the eight years before the financial crash, we had almost no new jobs. Only 10% as many as we had when I was president. Real family income was lower than it was the day I left office. The economy was weak as could be. Then you had this financial crash. Historically these things take five years to get over…. The American people are not used to waiting five years for anything good to happen, but that’s what we’re facing. And if you want to speed it up, we got to do things in the government.”