Why the US recession may be the worst in recent history

This graph from the Big Picture really tells it all:

Source (Big Picture)

Employment levels in the US are declining rapidly.

Furthermore this graph from Econbrowser paints a worse picture for hours worked – indicating that, unless there has been a huge increase in productivity in the US, economic activity is declining fast.

Source (Econbrowser)

Does this matter for us? Well the US accounts for 10% of our merchandise trade, and they are a major driver of economic activity in Asia – an area which accounts for another 35% of our exports …


As an indication that the labour market is not collapsing as quickly as back in the day when labour markets were extremely rigid we have this graph from the Big Picture:

Source (Big Picture)

Note:  These declines are relative to the size of the labour market.  In total job loss terms this is bigger – however, the decline relative to working age population is more indicative of the relative true states of the labour market during these times.

4 replies
  1. Eric Crampton
    Eric Crampton says:

    It might be nice to have percentage changes rather than absolute, and it might be nice to have a few other recessions rather than just some recent shallow ones for comparison. Of course, you’re just giving somebody else’s picture here, but why did they give absolute rather than percentages, and why did they pick those recessions? Hmmm.

  2. Matt Nolan
    Matt Nolan says:

    Hi Eric,

    Indeed, you are correct to question the use of absolute values and the comparison to recent recessions.

    The purpose of my post was to illustrate that its looking worse than the most recent, shallow, recessions. I guess I haven’t made that clear (I thought the term “recent history” was indicating that – but maybe not) – I might try to put an update in that does make that clear.

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