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September 24, 2011 9:20 AM Choosing a point of comparison

By Steve Benen

When we compare the job losses associated with the Great Recession to other economic downturns, the political world will often measure up this recession to the rest of the U.S. recessions in recent generations. This kind of evaluation, however, may not be ideal.

This Calculated Risk chart, for example, shows the job losses connected to every American recession since World War II. That red line highlights the recession that began in 2007, and helps show how much more severe this downturn is than anything we’ve seen in the post-Depression era.

The problem, of course, is that the Great Recession isn’t just worse than all modern American downturns; it’s also a different kind of recession — this one, like the Great Depression, was the result of a financial industry collapse. With this in mind, the Oregon Office of Economic Analysis this week posted a different item, showing job losses associated with financial crises around the world, and by this point of comparison, “the U.S. labor market has performed better than 4 of the previous Big 5 crises.” (via Ezra)

I realize, as a political matter, this kind of information is cold comfort. No one, least of all those struggling most, really wants to hear, “It could have been worse” or “Swift action prevented a more serious disaster.”

But for the sake of understanding and comparing, facts are facts. As brutal and devastating as the Great Recession has been, a combination of steps from policymakers, including the stimulus, the auto industry rescue, and even TARP — all steps the right finds offensive — stabilized an economy teetering on the brink of collapse. As the second chart helps show, we even started recovering faster than other countries facing similar circumstances.

Voters may not care, but it’s worth pointing out the truth from time to time anyway. As Bill Clinton explained on “Meet the Press” last weekend, “First of all, he became president just a few months after the financial crash. Now, keep in mind, even before the financial crash, in the eight years before the financial crash, we had almost no new jobs. Only 10% as many as we had when I was president. Real family income was lower than it was the day I left office. The economy was weak as could be. Then you had this financial crash. Historically these things take five years to get over…. The American people are not used to waiting five years for anything good to happen, but that’s what we’re facing. And if you want to speed it up, we got to do things in the government.”

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

Comments

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  • c u n d gulag on September 24, 2011 9:29 AM:

    Not fer nothin', Bill, but you kind of laid the groundwork for disaster with NAFTA and not vetoing the repeal of Glass-Steagall.

  • j on September 24, 2011 9:37 AM:

    An unrelated question, why are the NRA people upset that Obama did not do anything to ban gun ownership, the are calling it an Obama conspiracy!

  • Kathryn on September 24, 2011 10:08 AM:

    You're singing my song Gulag, major reason for bank collapses was repeal of Glass-Steagall. doubt Bill will ever willingly bring that up, his answer would be interesting. Sure he has a well rehearsed response at the ready. Bill was a good president but that was a major league error. Still remember Alan Greenspan's genuine shock that Wall Streeters would be so greedy as to crash the economy by their actions. These Randians are naive true believers, nothing dissuades them. A mere high school graduate, such as myself, wasn't the least surprised or shocked.

  • Kathryn on September 24, 2011 10:10 AM:

    You're singing my song Gulag, major reason for bank collapses was repeal of Glass-Steagall. doubt Bill will ever willingly bring that up, his answer would be interesting. Sure he has a well rehearsed response at the ready. Bill was a good president but that was a major league error. Still remember Alan Greenspan's genuine shock that Wall Streeters would be so greedy as to crash the economy by their actions. These Randians are naive true believers, nothing dissuades them. A mere high school graduate, such as myself, wasn't the least surprised or shocked.

  • Jose Padilla on September 24, 2011 10:40 AM:

    On Glass-Steagall, Clinton says "I was given bad advice and I was wrong to accept it." Fact was, if he vetoed the bill he would have been overridden.

    The guy was perhaps the best president, economically speaking, in the history of this country. Twenty-two million new jobs,better than 4% growth per year with no inflation, the lower and middle classes gaining ground for the only time since the 60s, lowest unemployment since the 60s and a balanced budget.

  • Jose Padilla on September 24, 2011 10:45 AM:

    Regarding the chart showing financial crisis in other countries, those other countries all appear to have had their financial crisis at a time that the rest of the world was doing well (Spain in the 70s being a possible exception). They had the luxury of "exporting" their depression by devaluing their currencies and increasing exports. With practically the whole world currently in recession, that's not an option. You could be looking at anothe ten years of slow growth.

  • danny shenanigan on September 24, 2011 3:00 PM:

    Great post Steve! More of this please. As you get this sort of info out there, the more it will be picked up on a larger, albeit diluted scale. I think even progressives need a bigger dose of reality when considering democratic effectiveness of late.

  • Sam on September 24, 2011 8:09 PM:

    I love when people trot out that chart of all post-WWII recessions. As if those recessions also entailed a complete meltdown of the global financial system and was followed by the threat of a massive debt crisis and collapse of the currency of an entire continent.

  • Objective Dem on September 24, 2011 8:12 PM:

    I have a MAJOR complaint. Why are you posting this on a slow Saturday? Post it on Monday, Tuesday, Wednesday, etc until people wake up and recognize that we averted a major depression.

  • The Oracle on September 25, 2011 4:59 AM:

    President Clinton's analysis is exactly right. The only problem is that our nation is facing a bunch of Kamikaze Republicans doing the bidding of imperialistic corporations and wealthy individuals.

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