One of the sillier debates I’ve seen recently is over whether this recession deserves the adjective “great.” Some economists apparently don’t think so, arguing that it’s not clear that this slowdown is worse than the one in the early 1980s.
I’m persuaded by this chart, which shows the median duration of unemployment (how long joblessness lasted). Just look at that spike (or click HERE to see the original):
The previous peak in the early 1980s was just under 12.5 weeks. The most recent peak was over 20 weeks.
Recessions involve more than unemployment, but the depth and speed of this economic downturn clearly make it out of the ordinary.
This is also the chart, by the way, that challenged some of my cynicism about whether people would really change their behavior post-recession.
I now lean toward the idea that we may see permanent changes in attitudes and behaviors, especially among 20- and 30-somethings who have never seen a dramatic slump before. Once you’ve seen that many people out of work that long, it’s harder to maintain the illusion that the good times will always roll, that you’ll always be able to pay back the money you borrow and that you’ll never need an emergency fund.
The Economist says our whole American economy is undergoing a shift from debt and consumption to savings and exports. The special report is well worth reading HERE.
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