Why the World Needs Error Bars.

I received this chart in my email the other day. It got me thinking: What does the average recession look like? Is there such a beast? So I downloaded all of the employment data from the St. Louis Fed, and looked at the list of official recessions and made this graph, which corresponds to employment changes as a percentage of jobs gained or lost since the peak employment numbers around each recession. Sometimes employment started turning down before the recession began, and sometimes it turned down after the onset of the recession.

I don’t think it makes much sense to talk about an average recession or average recovery when it comes to jobs. The standard deviation that would go along with such a discussion is quite large. Look at the 2001 recession. It resulted in almost no job growth until a significant way into the bubble that lead to the current recession. Is that more or less representative than the average?

Having said all that, it is clear that the employment situation is pretty bleak. We’ve lost any jobs growth, however pathetic it was, from a span of a decade. Where it is possible to compare against historical aggregates, we compare unfavorably.