Note that after the mid-1970s recession, unemployment hit 9%. After four years it dropped to 6%, but never hit 5% -- the level most economists use to describe full employment.
After the second recession of the early 1980s, unemployment was nearly 11%. It took over 5 years to get back to "full employment."
After the early 1990s recession, unemployment rose to over 7.5%. Again, it took over five years to get back to full employment.
Although the unemployment rate increased after the early 2000s recession, it didn't hit very high levels. But like the last three recoveries, it took a long time (as in nearly four years) for the unemployment rate to drop.
This commonality with previous recoveries does not make the current situation any easier, and should not be used as justification for doing nothing. However, it is important to remember we've been here before.
3 comments:
What's really striking to me every time I look at similar graphs is how seldom we've actually enjoyed "full employment" during the past 40 years. I mean shit, there have been what, maybe 6-8 years of sub-5% unemployment in that entire time?
The thing is - the other recessions had a peak unemployment and then a rather decent plummet off the peak. Sometimes there was a plateau around 6-7 percent before it continued to drop a bit more.
This time, it went up and has stayed up. No other "peak" lasted this long in the charts you display.
The comparison of current unemployment to past unemployment during and after the mid 70s and early 80s recessions is only valid if you use the current U-3. This is not accurate, however, as the current unemployment measure most comparable to the unemployment measure in those times is U-5. And the U-5 rate was 10.6% NSA in October and 10.8% in October of 2009, showing it has barely moved down at all over the past year, meaning that this recovery in the unemployment rate is significantly worse than the recovery in the rate following those past recessions.
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