Ken Leiser of CB Richard Ellis
made a presentation before a seminar I taught this past Friday. He
presented two graphs using data from the Bureau of Labor Statistics
that really put this recession in its proper perspective.
The first shows employment change during the last four recessions.
The first shows employment change during the last four recessions.
The red line with red squares is the current recession. It is closely tracking the purple line, which is the 1981 recession. Recent data not on this graph suggests that the current recession may not go as deep as 1981. There are some indications that it may last longer than 1981, but we still do not know if it will last as long as the 2001 recession. History shows us that deep recessions tend to be shorter (1981) and shallow ones longer (2001).
The graph that really puts things in perspective is the one he showed that compared these recessions to the Great Depression.
The little squiggles in the upper left are the lines from the first graph. The long, deep line is the Great Depression.
What is different between the 1981 recession and this one is our focus has changed. In 1981 we looked to the private sector to pull us out through tax cuts that stimulated economic growth -- much of it entrepreneurial. The current focus of public policy is to use the current recession as a tool for social and economic change.
That is why it is in the best interests of those advocating radical change to make this recession sound as ominous as possible. First they told us this was the worst recession since the Great Depression. They told us it may, too, become a depression if it is not one already. Now that it is becoming clear to all of us that the economy is bad, but no where near a depression, the spin begins.
We now hear this being called "The Great Recession" by more and more in Washington and the media, led by Paul Volcker who is head of the President's Economic Recovery Advisory Board. See examples of this from the New York Times (here and here).
If we let entrepreneurs actually do their part to lead us out of the current downturn, unfettered by stifling tax increases and mounting government regulation, this recession would probably end up looking a lot like 1981 -- deep and painful, but not as long and dragged out as 2001.
The graph that really puts things in perspective is the one he showed that compared these recessions to the Great Depression.
The little squiggles in the upper left are the lines from the first graph. The long, deep line is the Great Depression.
What is different between the 1981 recession and this one is our focus has changed. In 1981 we looked to the private sector to pull us out through tax cuts that stimulated economic growth -- much of it entrepreneurial. The current focus of public policy is to use the current recession as a tool for social and economic change.
That is why it is in the best interests of those advocating radical change to make this recession sound as ominous as possible. First they told us this was the worst recession since the Great Depression. They told us it may, too, become a depression if it is not one already. Now that it is becoming clear to all of us that the economy is bad, but no where near a depression, the spin begins.
We now hear this being called "The Great Recession" by more and more in Washington and the media, led by Paul Volcker who is head of the President's Economic Recovery Advisory Board. See examples of this from the New York Times (here and here).
If we let entrepreneurs actually do their part to lead us out of the current downturn, unfettered by stifling tax increases and mounting government regulation, this recession would probably end up looking a lot like 1981 -- deep and painful, but not as long and dragged out as 2001.
First of all, you were up way too early this morning Dr. Cornwall.
Secondly, I think this post is fascinating. I've heard a lot in the news about this recession and how bad it is compared to previous ones, but I hadn't taken the time to do my homework about it. I wish more people could see these graphs for themselves instead of contributing to the recession scare. I don't know if this is completely related, but I wonder how much of this recession has been a self-fulfilling prophecy. People were talking about our economic situation looking like a recession before it actually became one. I wonder how much Washington and the media's hype contributed to the actual economic slump we are currently in.
Mr. Cornwall:
Graphs don't lie, do they? What a magnificent way to put our current financial climate into focus.
Thank you ~
CFO
Thank you for putting this into perspective. I am recently unemployed and this gives hope that it may not last too long. I'm taking this opportunity to join the ranks of entrepreneurs and this is very encouraging!
Unemployment aside, the stock market behaved more like the Great Depression than other recent recessions (http://tinyurl.com/587968), particularly in the 12-16 month period. Discuss among yourselves...
This post was very inspiring to me. It puts a great perspective on our current economic state. Things could be much worse than they are now. This is where the inspiration came for me. We have the opportunity to get our hands dirty and really change our country's financial downturn. Now is such a great time to capitalize on our dreams, when many of us lost a good amount of our money in the market, or didn't have a lot to begin with. We have so much to gain from this bump in the road. I thought that the video you posted a couple of days after this coupled well with this post. I am ready to start making changes.