Sunday, February 08, 2009

On "Mild" Recessions And Quick Turnarounds

Sometimes a simple representation tells you all you need to know, when it comes to understanding the circumstance. For anyone who still clings to the notion that the current economic downturn will be short lived, or relatively "mild" in comparison to past recessions, this graph of the situation in American tells a chilling tale:

To put it into a domestic perspective, the Canadian economy has shed more jobs, per capita, than the Americans in the last three months.


Anonymous said...

I guess I'll be the pessimist here, but what is going on is far from a recession or a "bear market". Yes, there is a massive global economic downturn caused by bad assets tethered largely to the suprime fiasco in the US, but much more insidiously, it is also the fault of monetary policy, the system of fractional reserve banking (through unaccountable, undemocratic private central banks) and fiat currency itself which have caused innumerable inflationary bubbles. The whole thing looks like a giant ponzi scheme that could lead to a significant restructing of the world's economy.

I found the best, unbiased visual explanation of how we got into this mess on the Guardian's website.

Chrystal Ocean said...

Are the figures adjusted to reflect changes in the population and the number of people looking for employment?

Anonymous said...

Wow. That is one scary lookin' chart.

Steve V said...


No. Population 1991 - 247 million, 2001 - 278 million, 2008 - 303 million. You can see pretty clearly though, that the population increase doesn't account for the disparity, not even close.

Steve V said...

1991 = 247 mill population/1.6 mill jobs lost, 2001 = 278 mill/ 2.7 mill jobs lost, 2008 = 303 mill/3.6 mill jobs lost.

That means more than double the job losses of 1991, population growth 22%. Ouch.

What really scares me, our job losses are actually higher the last three months, and that's comparing us to a meltdown situation in the United States. Sort of like saying it's hotter here than in hell, at the moment.

Red Tory said...

I saw that a TIME the other day. Pretty scary, huh?

Too bad Harper and Flaherty had it turned upside down for most of last year.

Anonymous said...

I can't believe the Bank of Canada is projecting this recession won't be as bad as the one in the early 90s.

tedhsu said...

They should have included the early 1980's recession. The 1990 and 2001 recessions were not so horrible as recessions go. The figure came out of the speaker Pelosi's office it seems - so they are trying to make the current job losses look as bad as possible. I happen to think that it is going to get much worse, but they could have been more honest by including the 1980's figures.

Another thing to look at is global employment (and other indicators). I think the comparison is probably much worse looked at that way. Globally, I think you can make a good case that this will be the worst economic event since WW II.

Anonymous said...


I just put up some charts on the Canadian employment situation going back to 1976 which do adjust for the size of the labour force. And the picture is not pretty.

Steve V said...


Well done!

Anonymous said...

On Garths site someone points out that this is seasonaly adjusted and the real job loss number could be as much as 400,000!

Comparing Canada to the states is like apples to oranges. The states problems lie in too low a tax system to support services, too low a wage structure outside unionized positions to cotribute to the economy, no universal public health sysem, a too strong belief in free enterprise at all costs and a federal government that spends over half their budget on the miltary which provides a few jobs but no longer can stimulate an economy of 350 million people.With Obama pulling out of Iraq and starting to question Afganistan maybe he has figured out the esy solution to their problems?

Canada has two problems only. 70% of our economy is built on selling raw resources at pennies on the dollar and buying finished products in return. The second problem is that unlike previous recessions most of our companies are no longer owned by Canadians and if sales drop will be quicker to shut down than in the past. Unlike the states we have no easy solution in sight nd worse have a leader that thinks being leader is to play politics 24/7 and has yet to actually lead our country.

The only solution to getting off the boom/bust cycle in this country is to change how we do things. Nanticoke successfully replaced coal with wood pellets which burn cleaner than natural gas. There are millions of hectares of forests in B.C., Yukon, New Brunswick and Quebec amomg others that have been devistated by insects which could be harvested to replace coal in every coal plant and start new plants and employ as many as a million people most of whom used to work in the forestry industry. The knuckledraggers in Alberta have a big hangover right now and haven't clued in that their future lies in immediatly stopping the pipelines to ship bitumen to the states and start talking to the rest of Canada about building a pipeline to ship the manmade crude from their processing plants to refinerys in the rest of the country especially a big one in B.C. which could ship diesel and other finished products by ship to other markets as well as produce all the gasoline we need in the west. Hopefully mining will die soon and be replaced with recycling here in this country. The richest deposits of metal in the world today are in our garbage dumps along with tonnes of plastics in finished form ready to be melted and remolded and tonnes of paper, cardboard, glass, wood and rubber just waiting to get turned into new products. What better time to get moving on building a new economy then now?
Not to mention building a modern east-west power grid that would employ a hundred thousand or more?

Sorry this got so long but I got pissed off at reading endless articles about doom and gloom without one person looking at the fact their will be an end one day and we can either struggle with the few industries that will survive or take action to create a new economy alongside he remains of the old one and then just imagine how heated it would get when we start building houses again.

Steve V said...


That's my biggest complaint, there's no sense of a vision for how we get out the other side. It's almost like the government is content to just ride it out, instead of using this opportunity to re-calibrate our economy so it's better placed in the future. I must say, I've been pretty pleased with McGuinty's Green Energy Act, the more they flesh it out, the more it seems a real plan to position Ontario for the future. That's what I want to see, investing in solutions, rather than temporary bandaids, that can help you come out, but really haven't used the downturn as an opportunity.

Anonymous said...

I can't stand charts like this. The ultimate point is to show that things are bad. Okay. Fair point, but this chart hardly fair and balanced. The truth is that things ARE bad, you don't need to skew the data to proove that.

Using nominal job loss data to compare to 28 years ago. . . misleading.

Using Peak Job Month as the basecase. . . impossible to determine how misleading. We have no idea if that peak job month is high or low based on seasonal variation.

The only way you can accurately compare the situations as they have done here are with seasonally adjusted per capita numbers.

As it is, this chart only tells us the editorial stance of the guy who drew it, that things are bad.

Thanks, we knew that.