Recessions are really about people--losing jobs, missing mortgage payments, starting new businesses, and closing businesses that have failed. But you can't dismiss the numbers. The unemployment rate rises, the gross domestic product slips, home sales fall, advertising dollars fade. While the stories about people are easy to sensationalize, at least the numbers make our circumstances objectively measurable. After all, numbers can't be made to appear as anything other than what they are, right?
Let's take a look at employment. The workforce of 2009 is huge. Consider that nearly 4.2 million Americans were hired in April, and an additional 4.1 million were hired in March--all while in a recession. Despite the downturn stripping about 7 million jobs from the nation's payrolls, the number of employed workers has more than tripled in just seven decades.
[See more on surviving long-term unemployment]
You'd be forgiven for thinking that the numbers hadn't changed that much, given the flurry of headlines and news reports that have been comparing the absolute numbers of job losses during this recession with those of the past.
For example: Apparently, the 2.6 million jobs lost in 2008 made up the highest annual loss since 1945. That's an interesting comparison, if you discount the differences between a workforce of 154 million and a workforce of 54 million that had just finished a world war.
Here's another example: The monthly payroll slash and burn of this recession hit a peak in January. The initial figure reported for that month was a loss of 598,000 jobs--which again sent some people rummaging through the Labor Department's numbers to find raw comparisons. It was, they told us, the bloodiest month since December 1974. At that time, the labor force was less than 60 percent the size it is now.
The urge to make comparisons is not only understandable; it's crucial. After all, context is everything. How on earth do we put the economic shifts we're experiencing into perspective? By and large, percentages are the most useful tool, and most economists and news reports use them liberally. An unemployment rate of 9.5 percent signals pain for many Americans--it's more than double the unemployment rate at the end of 2006, and it's the highest in more than 25 years.
But for all of this recession's gloomy comparisons to the Great Depression--now giving way to cautious perceptions of "green shoots"--the jobless rate is still not expected to surpass that of 1982 (never mind the Depression-era peak of 25 percent). In 1982, the share of unemployed workers topped out at 10.8 percent and the unemployment rate held above 10 percent for 10 months between 1982 and 1983. Things were bad enough for House Speaker Tip O'Neill to insist that "the time for action by the federal government to end this depression is now."
Even if we avoid a repeat of the 1930s, economists don't expect that unemployment will snap back down anytime soon. Federal Reserve Chairman Ben Bernanke told Congress in early May that the country will probably continue to see considerable job losses and elevated unemployment. "Businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time, even after economic growth resumes," he said.
[See more on what it takes to get hired]
Expectations for the job market in recovery were equally gray in 1983. The Washington Post reported then that "slow recovery in the economy will keep unemployment above 9 percent through 1984, according to unpublished administration forecasts, sources said." The forecasts were wrong by a long shot. The unemployment rate dropped well below 9 percent by the end of 1983 and was 7.2 percent by June 1984.
The next employment rebound will depend on several factors. Some economists suspect that today's job losses may be structural rather than cyclical, because this nation of previously insatiable consumers appears to have been utterly transformed into a parsimonious populace of penny pinchers. (Of course, other economists are waiting for jobs to bounce back and lift consumer spending.) The threat of a "jobless recovery," in which jobs are added particularly slowly, looms large in part because it has defined the past two recessions. But it's worth keeping in mind that job losses were smaller in both the early 1990s and 2000s.
In general, the overall economic rebound will affect the speed of the bounce-back in employment. "The more robust the rebound, the faster the unemployment rate will be to come down," says Richard Moody, chief economist at Forward Capital. If consumer spending and exports tick up more quickly than economists expect, businesses will have an incentive to begin hiring more quickly. It's a big "if," but economies, like statistics, can be full of surprises.
Note: This blog post was adapted from a column in the July issue of U.S.News.