The economic chaos caused by the novel coronavirus pandemic already dwarfs historical recessions, including the Great Recession.
- The April jobs report showed the dire effects of the coronavirus outbreak on the US economy, with over 20 million jobs lost in a single month.
- Finance blogger Bill McBride published a fascinating chart comparing the depth and breadth of previous economic downturns to the job losses already seen from the pandemic.
- The current job losses, measured as a percent decline from the previous employment peak, are already vastly deeper than any other post-WWII US recession, including the Great Recession after the 2007-2008 financial crisis.
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The novel coronavirus outbreak has devastated the US economy, with nearly every indicator in the monthly jobs report for April showing a historically unprecedented surge in unemployment.
Finance blogger Bill McBride published a chart showing how employment has declined and recovered during and after historical US recessions since World War II. The chart starts at the highest level of non-farm payroll employment at the beginning of each of the 11 post-war recessions as defined by the National Bureau of Economic Research, and then shows the percent decline in the following months until employment returns to the pre-recession high.
The chart gives a fascinating look at how deep each recession was in terms of job destruction, while at the same time showing how long it took the economy to return to normal. Many historical recessions were relatively shallow and short, but more recent downturns have tended to take a longer time to return to pre-recession employment peaks.
The Great Recession that followed the 2007-2008 financial crisis, shown in blue below, was previously the worst post-war US economic downturn. Employment fell 6.3% between the December 2007 peak and the February 2010 low during that period, and it took a full 76 months — over six years — for employment to finally catch back up.
Despite that, the reduction in employment over the last two months dwarfs any decline from the rest of the chart. The number of Americans in non-farm payroll jobs has already fallen a whopping 14.0% from the February 2020 peak, as businesses have shuttered and companies have furloughed and laid off employees en masse in response to the coronavirus pandemic. Much of that occured in April, when over 20 million jobs were lost in a single month.
Here's our version of McBride's chart, with the current downturn in dark red: