The dramatic chart Nancy Pelosi’s office put out comparing job losses so far in the current recession with those in 2001 and 1990-1991 has gotten a lot of play in the Internets. As well it should–it paints a dramatic picture (job losses in the current recession have been much more severe). But we already knew this recession was a lot worse than the last two. It would be far more informative to have comparisons with the deeper recessions of 1981-1982 and 1974-1975. So here’s a chart of what happened to payroll employment during every recession since the mid-1970s. I’ve done everything in percentage terms because there are a lot more people in the labor force now than in the 1970s, but otherwise followed the format of the Pelosi chart:
What do we learn? So far the fall in employment is comparable to that in 1974-1975 and 1981-1982. If the comparison holds, the declines should end within the next four or five months. But we of course have no idea whether the comparison will hold. Past performance is no guarantee of future results.
Another lesson brought home by the chart is how weak the recovery from the 2001 recession was. It was a mild recession, but it took four years for employment to return to its February 2001 peak. Setting aside the worst-case scenario of a continued downward employment spiral that puts 1974-1975 and 1981-1982 to shame, a recession that combines a severity akin to that of 1974-1975 and 1981-1982 with a recovery as anemic as 2001-2002-2003-2004-2005 would be not a whole lotta fun.
Update: Economist William Polley beat me to this, and includes in his chart every recession since World War II. That makes the chart pretty hard to read–but it’s still worth a look.