I’ve often heard that this recession is different (that is worse) because it grew from a financial crisis, as opposed to fighting inflation and actions of the fed. The idea has its critics (more on that in a moment) but here’s some evidence to back the idea up.
Josh Lehner of the Oregon Office of Economic Analysis has a great post up on his blog that looks at US job losses in comparison to other financial crises (a opposed to previous US recessions). It is a great post and has been picked up by The New York Times. Go to Josh’s post for the full story (and the NY Times for their take) but here are two provocative graphs.
The first is the now familiar job losses in this recession compared to post WWII recessions in the US courtesy of the NY Times:
Looks pretty grim, and it is, but you might be tempted to think we have done a pretty terrible job managing this crisis (and before you get partisan, both the Bush and Obama administrations, along with the non-partisan Fed chief, have managed this crisis), but if you compare our performance to other financial crises in the world you get a different picture. Here is Josh’s graph:
Fascinating stuff Josh.
The Crisis in Comparison
Wed, 26 Sep 2012 15:44:00 GMT
You can get a different perspective though if you compare not across nations with financial panic induced recession, but far back in history to the financial panics in the US. John Taylor in his blog in writing about this recession (that he blames on misguided attempts to ease the recession actually making it worse notes of the current recession:
Some say that recoveries from deep U.S. recessions–or from financial crises–are usually slower, but this is simply not true. Below are similar charts from the 1893-94 recession
and from the 1907 recession,
both associated with severe financial crises. You can see the sharp rebounds, nothing like the terrible recovery we have seen recently. This does not imply that the period after these recoveries was smooth; indeed a double dip followed the recovery in the early 1890s.
An additional point of interest is the idea that financial crisis or panic makes for a longer recession is often asserted, but the reason why isn’t clear. See this for example.