How to Make 9.1% Unemployment Look Good

By considering the aftermaths of other financial crises throughout history, the current labor market doesn't look so bad

600 hire me 2 REUTERS Mark Blinch.jpg

The U.S. Labor market is terrible. The national unemployment rate has been at or above 9% since May 2009, but for two months earlier this year. And really, that underestimates the problem: millions of Americans aren't counted in that rate because they're discouraged. You can't find any silver lining here. But as bad as this labor market feels, it's actually not worse than what most nations experience after a serious financial crisis. In fact, it's near the top of the heap.

That's what a new report from the Oregon Office of Economic Analysis shows. But let's start with the narrative that you may have heard: this job market is historically bad. That's certainly true in a U.S. context. You may have seen this ugly, ugly chart before:

us_emp_returntopeak - 1.jpg

It shows the percent job losses since the peak of the recession. And that horrible red line represents the current labor market. From this chart, nothing else can comes close to the recent financial crisis in terms of the damage done to jobs.

But if you look beyond U.S. history alone, you find some significantly worse outcomes. Here's the chart form the Oregon Office of Economic Analysis, which shows the "Big 5" financial crises, along with the current U.S. situation:

big5_emp_returntopeak - 2.jpg

That red line suddenly doesn't look so bad in this context. This helps to show why the employment recovery will be so slow: because that's how it is after most financial crises. And unemployment isn't the only metric by which the OOEA shows the U.S. financial crisis aftermath is rather similar to others. Here are some more metrics:

rr_comparisontable1 - 3.jpg

Again, this provides little consolation. The U.S. economy still stinks -- badly. But the point is that its stench isn't much worse than that of other economies following very deep financial crises. In fact, the U.S.'s pain might be a little bit less severe than average.

(h/t: Alphaville)

Image Credit: Mark Blinch/Reuters

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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