This is the chart:
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The gray shaded areas indicate “official” recessions since 1965 to the present. The height of the graph line indicates the number of weeks the average unemployed person is without work.
Let’s look at this chart carefully. First notice that recessions generally cause a rise in the unemployment duration (UD). The sloping upward of the curve in the gray areas is the graphical effect. When recessions end these curves begin to slope downward as the UD subsides.
Notice the average variation of the UD over the last 50 years is between 5 and 10 weeks roughly. This is regardless of whether there is a recession or not. The current “recession” is at 26 weeks. This is a nearly 3 times the highest UD over 50 years! This is astounding. Notice too that the rate of climb of UD in the current recession is very sharp compared to other recessions.
Also notice that the gray area (official recession period) ends with an immediate downward trend of UD in 1970, 1975, and 1983. The rise is delayed in 1990 and 2001. Our definition of recovery or recession end may have changed because the improvement in employment recently seems to lag “recovery”. One might suspect that for political reasons the government may have redefined when recover happened in recent recessions. At the very least, the positive impact on employment has not recently been coincident with official definition. It reminds us that the current recession is being pronounced virtually over… without any evidence in the economy or employment. This suggests political lies not good assessment of the economy. Our chart would suggest that the last two recessions lasted years more than “officially” defined.
What is different about the current recession that makes it spike at 3 times the normal UD over the last 50 years? Well, the government has handled it differently this time. Since Roosevelt’s time we have never put such Keynesian expenditures out to “stimulate” a recovery. We have not made massive debts for bailouts, for bank takeovers, for healthcare entitlement outlays, for car industry takeovers, for war expenses, for economic stimulus, for unemployment welfare, and for housing collapse bailouts. Our government debt is record highs. In addition, we have enacted massive regulation, taxes, and benefits affecting commerce at every level. All rational economists recognize such instability, such expenses, and such uncertainty dampen free commerce and slow growth. It is little surprise we are looking at UD like the “great depression”. The medicine is making the patient sicker.
Now look at the recovery of UD after each recession (gray area). The downward trend in the UD slopes are about the same. They are the effect of free enterprise healing and commerce starting toward health. These slopes are the same because the recovery is determined by American commerce and investment… not government mandate nor nudging. Applying the same recovery slope to the current high UD would take 20 years to regain the UD of 2005. This current high UD is not only painful to Americans; it portends a long time to recovery. It would suggest the effects of the current recession could take 20+ years to abate. This is assuming we have no additional recessional dips. Such is not likely the case. The chart itself shows we have recessions every 5 to 10 years.
In total, this chart says to us that the current recession and how it is being “treated” by the government is definitely a threat to America. It is a threat that our economy will be slow to recover from. It is a threat that our government has treated poorly and extended its painful consequences with policies that have deepened the problem and destroyed our options in the future. We are currently heading to the bondage of debt, massive national debt. What we might have done tomorrow we can not for we have borrowed on our resources before they exist.
