I know the BP spill is scary (oil now washing up in the Florida Keys!) and I know a new vampire movie is coming out this month. But put the following two things together. First, let’s look at Friday’s unemployment report:
The economy has lost 0.6 million jobs over the last year, and 7.4 million jobs since the recession started in December 2007. Ex-Census hiring, the economy only added 20,000 jobs in May.
The unemployment rate decreased to 9.7 percent.
The dotted line is ex-Census hiring. The two lines will rejoin later this year when the Census hiring is unwound.
For the current recession, employment peaked in December 2007, and this recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early ’80s recession with a peak of 10.8 percent was worse).
That graph is by itself scary enough when you really look at it. It compares all the post World War II recessions showing how deep they were (loss of employment and jobs) and long they were (length of time until we recovered all the jobs, not just started growing GDP). Obviously, the current recession is the deepest and greatest loss since the Great Depression. But it’s also on track to take the longest period of time to recover, taking longer to recover than the nearly 4 years it took to recover from the “mild” 2001 recession. To me this graph is like looking at some gross, scary, ugly monster in a horror movie, but it gets worse because…
Now we get this from the G20 Finance Ministers (via Financial Times and Calculated Risk):
First, from the Financial Times: G20 drops support for fiscal stimulus
Finance ministers from the world’s leading economies ripped up their support for fiscal stimulus on Saturday …
The communiqué of the meeting made it clear that the G20 no longer thought that expansionary fiscal policy was sustainable or effective in fostering an economic recovery because investors were no longer confident about some countries’ public finances.
Excerpts with permission
This means that the leaders of the 20 largest economies have agreed to stop fighting unemployment and instead start tightening their budgets. No more stimulus – “austerity” instead. No more hope for the 10% unemployed in U.S., or the 8.7% unemployed in Canada, or 10% unemployed in Europe, etc, etc.
If the unemployment graph is a gross, ugly monster; the news from the G20 is an innocent, cute teenage girl deciding to enter the dark, abandoned house all alone while the soundtrack starts playing ominous sounding music. We know how that scene goes….