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Sunday, February 19, 2012

Percent Job Losses: Great Recession and Great Depression

by Calculated Risk on 2/19/2012 09:58:00 AM

The causes of the Great Recession were similar to the Great Depression - as opposed to most post war recessions that were caused by Fed tightening to slow inflation - and I'm frequently asked if we could compare the percent job losses during the two periods. Unfortunately there is very little data for the Great Depression, although there are some annual estimates.

From BLS economist Steven Haugen: Measures of Labor Underutilization from the Current Population Survey

It is estimated that in 1933, at the depth of the Great Depression, about 13 million persons in the U.S. were unemployed, which translates into an unemployment rate of about 25 percent.1 However, those estimates were not available at the time. Throughout the Great Depression, there was little information on the extent of unemployment in the country. More important, there was no good way to assess whether the situation was getting better or worse. The wealth of timely statistical information on the labor market that we now take for granted simply didn’t exist.
1 Stanley Lebergott, “Labor Force, Employment, and Unemployment, 1929-39: Estimating Methods,” Monthly Labor Review, July 1948.

However we can use some of the annual estimate to get a rough idea of the comparison to the current recession:

Percent Job Losses During RecessionsClick on graph for larger image.

This graph compares the job losses from the start of the employment recession, in percentage terms for the Great Depression (rough estimate) and the 2007 recession.

Although the 2007 recession is much worse than any other post-war recession, the employment impact was much less than during the Depression. Note the second dip during the Depression - that was in 1937 and the result of austerity measures.

Percent Job Losses During RecessionsThis graph shows the job losses from the start of the employment recession, in percentage terms for the post war recessions. This shows the depth of the employment recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis - similar to the lingering effects of the Depression.

Summary for Week ending February 17th
Schedule for Week of February 19th