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Alice Cook at UK Bubble posts this graph and says the rise in long-term Treasury rates is caused by anticipation of massive government borrowing to come, which is why all stimulus packages are doomed in advance:

But here's the shock graph, courtesy of Barry Ritholtz:


click to enlarge

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 9th, 2009 at 11:43:49 AM EST
The second graph should be done in percentage terms rather than absolute. There's been a wee increase in total employment over the past sixty years.
by MarekNYC on Mon Feb 9th, 2009 at 12:30:23 PM EST
[ Parent ]
To me the most shocking thing is not so much the absolute values. It's the curvature. The other graphs all have a positive curvature, that is to say jobs may be lost, but they are lost more and more slowly as time goes on.

This one has negative second derivative, by the looks of it, which means that not only are people losing jobs, job losses are accelerating.

Which is way more scary than the current unemployment rate in and of itself.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 9th, 2009 at 01:19:56 PM EST
[ Parent ]
In effect, job loss is approaching a vertical asymptote.  If presented in percentage form, as suggested by MT, I wonder how it would compare to The Great Depression? (1929-1939?)

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 9th, 2009 at 01:36:13 PM EST
[ Parent ]
a real charmer.  And, it jives with common sense.  Everyone (i.e. businesses) is hunkering down in order to survive.  You don't want to be one of the multitude who will run out of funds, and then what?  And so the screw continues to turn, deeper and deeper.  When will it stop?  When the only businesses left generate necessities ... food, fuel (to stay warm), etc.  All the other crap of our "advanced society" ... all the electronic toys, clothes, new cars, etc.  You can live without them.  And probably will for a good long time the way things are going.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Feb 9th, 2009 at 01:44:24 PM EST
[ Parent ]
... it'd look more like that.

In reality, the steepest post-war recession in the US was the immediate Post-War recession, which is masked by the use of numbers of jobs lost rather than jobs as a percentage of the population ... but while that was quite steep, it was also met with prompt and strong post-war economic reconstruction policies, so the recovery was also quick.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Feb 9th, 2009 at 02:06:36 PM EST
[ Parent ]
Bang into the lamp post! So Ritholtz is now posting a percentage graph:


click to enlarge

Current job losses are roughly on a par with 1976 and 1984.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 9th, 2009 at 01:35:37 PM EST
[ Parent ]
So looking at that graph, looking at overall slope things have really been in decline since 1980?

Coincidence? or am I just intentionally misreading the graph

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Mon Feb 9th, 2009 at 01:44:38 PM EST
[ Parent ]
I shouldn't have said "job losses", though, since the red line shows the rate of change in total employment from one year to the next.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 9th, 2009 at 02:31:08 PM EST
[ Parent ]
So in another view if you follow the peaks of growth down then even ignoring the current collapse the peak of growth will  be below 0% by 2030?

Photobucket


Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Mon Feb 9th, 2009 at 04:15:37 PM EST
[ Parent ]
There seems to be a downward trend in job growth since the Reagan years, yes. Not surprising given all the offshoring. And as for the growthy growth in GDP, we know who's been grabbing that.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 10th, 2009 at 03:26:21 AM EST
[ Parent ]
things have really been in decline since 1980?
Since 1984, it would appear.  That was about when the process of sending manufacturing overseas in the USA really took off, and it was just after the whole bubble economy got started.  Perhaps subsequent unemployment was masked by revisions and extensions to employment categories by the BLS, (after all, the population did continue to grow,) and by significant growth being in the "underground economy."  The early 80s was also when "illegal immigration," especially from Mexico, really increased, and a lot of these workers went into the "informal" economy, such as my former gardener in L.A.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Feb 10th, 2009 at 01:19:31 AM EST
[ Parent ]
This graph is not kosher, somehow.

YoY employment changes are trending downwards, but at the same time, the unemployment rate is also trending downwards. And in this time frame, the total workforce was growing.

That's impossible. Something Has To Give.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 11th, 2009 at 12:04:23 PM EST
[ Parent ]
A strange graph : it is comparing a data ad its derivative. Also, although the workforce is growing, is it growing as fast as the adult population ?

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Thu Feb 12th, 2009 at 03:26:37 AM EST
[ Parent ]
The second graph is presumably total net change, where total nonfarm jobs added (whether attributed to increasing size of labor force as compared with growth of economic activity) is inclusive, government payroll is usually excluded, and whether or not BLS firm birth/death modeling is credible.

(Un)employment data are by definition percentages of a total population willing and able to work, statutory bounds being 15 < age < death. The BLS JOLT datasets claim to count available employment, or jobs open, or unmet demand, which is silly. But entirely consistent with the current policy assumption that labor skills are fungible.


Diversity is the key to economic and political evolution.

by Cat on Mon Feb 9th, 2009 at 02:35:29 PM EST
[ Parent ]
by Jerome a Paris (etg@eurotrib.com) on Mon Feb 9th, 2009 at 02:48:41 PM EST
[ Parent ]
Thanks, this is hugely informative. So, if I interpret it correctly, we can say that this "recession" will probably be "at least almost as bad as" the global crunch of the early 1980s, but we can't conclude that it will be much worse for at least another quarter.
by PIGL (stevec@boreal.gmail@com) on Mon Feb 9th, 2009 at 05:31:40 PM EST
[ Parent ]
Looking at that, it would seem to say that the recession will certainly be worse, at least within the US, than the 1980 oil crisis crunch ... all of the prior downturns had an inflection somewhere in the range of -1.0% to -1.5%, while this one was just getting started in that range and there is no inflection in sight.

If we get an inflection now, we might hope to turn the corner at -5%, but -3% seems wildly optimistic.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Feb 9th, 2009 at 06:14:34 PM EST
[ Parent ]
I see your point, I just wonder if the data are sufficiently precise, and commensurate among periods, such that we could reliably detect inflection points or test for differences in their relative locations within the series. Chi-by-eye, you know!
by PIGL (stevec@boreal.gmail@com) on Mon Feb 9th, 2009 at 06:27:53 PM EST
[ Parent ]
... frequency as macro stats go ...

... and even more to the point, the latest monthly employment figures release showed U6 unemployment at 15.4%, so this makes over a quarter that U6 unemployment been (1) increasing and (2) increasing at an increasing rate.

The rest of the employment statistics confirms what the percentage decline in payroll employment suggests ... at the moment, employment is in free fall.

If the Us stimulus bill passes, it will of course not be enough to reverse that movement, but it might be enough to slow the rate of descent, which would be something of use.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Feb 9th, 2009 at 06:40:57 PM EST
[ Parent ]
Oh, and we are looking at the same graph. I think the evidence is pretty conclusive that this recession will not be milder than the 1981 version. Equivalently, one could say it will be at least as bad as the 1981 recession. I'm not sure the evidence is yet conclusive that it will be markedly worse. A very short time will probably tell.  
by PIGL (stevec@boreal.gmail@com) on Mon Feb 9th, 2009 at 06:32:07 PM EST
[ Parent ]
The basic story so far is that this recession, so far, resembles '82.  No great new story there.  Many predicted that.  A key difference, of course, is where the Bernanke Fed is at right now in comparison with the Volcker Fed then.  In '82, Volcker was able to contract the money supply to combat inflation, and then pull rates down dramatically to help engineer a robust recovery on the top-line numbers.

Obviously, that's not where Bernanke's at right now.  Rates are already at zero, deflation is the current state, and we're basically in a place where we're testing out theories Bernanke on Fed interventionism beyond the normal funds rate.

The chart looks really bad, even adjusting for population.  We're basically looking at declines in employment roughly equivalent to the '73 oil crisis already.  The crash is still accelerating, and we're already in the second-worst recession in the Postwar Era.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Feb 9th, 2009 at 07:04:38 PM EST
[ Parent ]
Not to mention that in the early 80s there was no significant federal debt.
Or major trade deficit.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Thu Feb 12th, 2009 at 05:45:20 AM EST
[ Parent ]
There was a bubble in US government bonds.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Feb 10th, 2009 at 04:56:16 AM EST
[ Parent ]

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