Recessions Suck [View All]

from TPM Cafe:



Recessions Suck
By Jared Bernstein | bio


I’m sorry to be a dismal scientist, but the US economy appears to me and some other economists, including some big shots, to be entering a recession. Most people think we’re already there. (Given lags in data, recessions don’t get officially identified until after the fact.)

But what does recession mean to folks on the ground? How bad is it, really?

Pretty damn bad. Given recent historical patterns, three million more people could join the unemployment rolls, and middle-income families, already squeezed, and with income levels still recovering from the last recession, could lose another $2,500.

Here’s a quick summary of how things tend to go bad in a downturn.



Unemployment, averaging all the way back to the late 1940s, goes up about three percentage points in a recession. Minorities and lower-income workers tend to get hit harder: for African-Americans, whose unemployment rate is already twice that of whites, the average recessionary increase is four points, taking their jobless rate solidly into double digits.

Given how much the economy and the nature of the business cycle have changed over the years, it probably makes more sense to emphasize the last two recessions—those in the early 1990s and 2000s—in these comparisons. These downturns were both milder in terms of length and depth by some measures, like gross domestic product, but quite protracted in terms of job and income losses.

In those cases, unemployment rose 1.3 percentage points over the official recession, and then just about another point in the jobless recoveries that followed. Let’s say the next recession (which may be underway) and recovery play out much like these last two. That implies an addition of three million people to the unemployment rolls. .....(more)

The complete piece is at: http://www.tpmcafe.com/blog/coffeehouse/2008/jan/11/recessions_suck