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Job losses in six recessions: Percent decline in payroll employment from peak month (motherjones.com)
28 points by curtis on Feb 9, 2009 | hide | past | favorite | 4 comments



It appears that if the fall is steep the recovery is also steep. Makes sense if you think about it, and that is good news for the current recession.


The plots are symmetric, indeed. Best case scenario though, if we start recovering immediately, full recovery is still 12 months away.


Anyone have a theory why the more recent recessions had such long troughs and slow recoveries?


Because they were the result of bubbles bursting, not the Fed raising interest rates. The 1981-82 recession was very steep, but the recovery was very quick, precisely because the Fed induced the recession by raising rates, and then ended it by lowering them. Our recent recessions have featured bubbles bursting, so the Fed has ended up lowering rates to try to induce recovery, although each time monetary policy has been less potent. As our mega credit bubble has burst, we are now at a point at which monetary policy has no traction - we've reached the zero bound, and are only left with more unconventional measures like buying longer term Treasuries - so we can expect a steep decline, and a slow recovery. At best we will have a U shaped recession; at worst, an L shaped depression.




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