Nancy Pelosi’s office has produced the following chart to illustrate the immediate need for stimulus (h/t Andrew Sullivan):
Of course there are a couple of odd things about this. First, it shows absolute job numbers, rather than unemployment rate (that is, job losses per capita). This matters, because the U.S. labor force is a lot bigger now than in prior recessions. Second, it ignores the recession of 1981 – 1982, which was by far the most serious of recent recessions.
Here is what the chart looks like if you look at the unemployment rate and include the ’81 – 82 recession:
The unemployment rate is increasing at about the same pace as it has in every recession for the past 25 years (from very different starting points).
Why does this matter?
Well, I think that the second way of looking at this data tends to lead naturally to two important observations:
1. What seems to matter in getting to really bad job losses is the duration of the recession. So, speed in passing a stimulus bill is probably a lot less important than getting our countermeasures right. This is, of course, diametrically opposed to the natural conclusion one would reach in looking at the first chart.
2. The structural work on the economy is at least as important as how we deal with the recession. The stagflation of the 1970s meant that we started the ’81-82 recession at about the unemployment level that we have taken more than a year of recession to reach today. Doing something, anything, to stop the pain of the current recession, no matter what its structural effects on the economy, might seem practical, but it is not.