Government is not the solution to our problem, government is the problem.
By Daniel at 28 August, 2009, 5:30 pm
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“The “Great Recession” is the name that has stuck for the economic decline that began in late 2007. But there’s some reason to think that using the word recession is being kind.
The U.S. gross domestic product has shrunk 3.9 percent in the past year, the worst drop since the Great Depression. Plenty of observers are willing to say that this recession is much deeper than anything we’ve seen since the 1930s–including the big dip in the early 1980s, generally accepted as the other candidate for the worst recession since the Great Depression. “I think it’s way worse today,” says Ridgely Evers of Tapit Partners, a longtime entrepreneur and venture capitalist who founded the software company Netbooks (now known as WorkingPoint). In the recession of 1981 and 1982, “people recognized it as a dip. [Today,] nobody thinks we are going to come back out in relatively short order.” This recession seems to have dragged on longer. According to the National Bureau of Economic Research (NBER), the U.S. economy was in recession from July 1981 to November 1982–16 months. But the current recession started in December 2007, says the NBER, so it’s already longer than the last big one.
[See Why the Housing Rebound Could Take 20 Years.]
The NBER defines a “recession” based on the all-encompassing gross domestic product figure. That economy-wide statistic may not mean much to the average American. In other words, the question “What is the economy’s output?” usually doesn’t matter as much as “How hard is it to find a job?” When we look at that question, how does the “Great Recession” compare?
[See 10 Countries in Deep Trouble.]
The unemployment rate is a murky number. It seems simple enough to look at the national unemployment figures released every month by the Bureau of Labor Statistics. In July, that number was 9.4 percent. At the peak of the early ’80s recession–December 1982–unemployment hit 10.8 percent.
So where’s the murkiness? The problem is that many of the people one would think of as “unemployed” are not included in this unemployment rate. For one, the Bureau of Labor Statistics does not count unemployed people who have been discouraged by the labor market and have given up looking for work. You are counted as a “discouraged worker” if you are available to work, want to work, and tried to look for work in the past year but gave up within four weeks for reasons including the belief that no work is available. The fact that the national unemployment rate excludes these discouraged workers has led many observers to believe it does not reflect the “real” level of unemployment. “Ask the average person if he or she is unemployed, and there is little hesitation in giving you an answer, but that may not agree with government definitions,” says John Williams, an economist who examines government statistics at shadowstats.com.”
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