Sunday, December 7, 2008
Employmenet fell faster output
The chairman of that committee, Robert Hall, an economist at Stanford University, points out a significant difference between earlier recessions and those since 1990. In recessions pre-dating 1990 employment fell more slowly than output. But since 1990, it has fallen as quickly or even quicker than output. The reason is that employers are now more willing to cut their workforce quickly when conditions turn against them. This is borne out by the economic data for this recession. While employment has declined steadily since December, real GDP as of the third quarter was still above its level at the end of 2007. The November jobs figures, though, point to a deeper recession than many had initially expected. The signs from the wider economy are also grim. Consumer spending will be under pressure for months to come. Home prices have fallen by 16.6% in the year to the end of the third quarter according to the Standard & Poors/Case-Shiller national index, and they still have further to go.