The Great Recession – A Historical Perspective

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Presentation transcript:

The Great Recession – A Historical Perspective

Headlines

Historical Perspective Recession Year Peak Unemployment Trough of GDP change Duration (months) 2001 6.4 -0.6% 8 1990 7.1 -1.2% 1981 10.8 -3.4% 16 1980 7.8 -2.4% 6 1973 9.0 -4.3% Average 7.0 -2.3%

The Great Recession Worse than your average recession. Duration: 18 months (Dec 2007-June 2009) 7 months longer than average Peak Unemployment: 10.2% 3.2% worse than average Trough GDP change: -4.1% 1.8% worse than average

The Scariest Jobs Chart Ever

NY Times Headline

How bad was it? http://www.history.com/topics/great-depression

Great Recession vs. Great Depression (1929 – 1933) Great Recession (2007 –2009) GDP Growth (%) -29% -4.2% Unemployment (%) 25% 10.2% Inflation (%) -25% +2% DJIA Change (%) -89% -54% Bank Failures (#) 9,096 (50% of total) 137 (1% of total) 8 8 8

The Recession is over?

The Recession is over?

The recession is over? Officially ended in June 2009. Means the worst (trough) is over, does not mean the pain is over! We had two consecutive quarters of GDP growth. Still have unemployment of 6.6%, 10.2 million unemployed workers. Lots of serious economic/social issues

Total Private Employment – U.S.

Total Private Employment - Ohio

Unemployment Ohio/National

Unemployment for College Grads

How large is the output gap?

What has recovered? Exports

Corporate Profits

Stock Market

What has not recovered Housing Prices

Encouraging Sign for the Future

Summary Recovery is not as strong as we would like, but we are on the right path. Leading indicators remain strong. Manufacturing, Exports, and Investments have all grown substantially. Inflation is not an issue. Projections for solid GDP and employment growth. Real GDP growth between 3-4%/yr., unemployment declines between 1.5-2%/yr. Recoveries take time (especially after a financial crisis). If history is a guide, the growth during the recovery will be greater than the decline during the Recession.

LEST WE FORGET THE TREND! U.S. Per Capita Income past 100 years

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