Monday, April 7, 2008

Deflating your Pessimism II

This graph shows Paul Krugman's preferred measure of the unemployment situation. It counts the percent of people in the following categories:

1) Unemployed (no job, would like a job, looking for a job)

2) Marginally attached (temp workers and the like)

3) Part-time for economic reasons (would like full time work but employer is cutting hours)

Notice that despite the "Oh God the end of our economic approacheth, lo the economy shall tremble before the power of the almighty financial crisis" rhetoric, this measure of unemployment has headed upwards to a level that is a) still 1.5% less than the highest reached following the latest downturn (2003) and b) a good 3% less than the peak in 1994.

Now of course this rate will probably climb over the near future, as it would in any recessionary environment. But there is nothing terribly dramatic about the current situation. Unfortunately "financial system meltdown" sounds really good in print.

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