bjbjLULU JEFFREY BROWN: The latest job numbers
reinforce the notion that the economy remains
weak when compared to recoveries of the past.
NewsHour economics correspondent Paul Solman
has periodically sought to visually capture
the shape of the economic period we're in.
He takes another look tonight, part of his
reporting on Making Sense of financial news.
PAUL SOLMAN: A recent networking meeting for
jobless executives outside Chicago.
How many of you think we are going into a
double-dip recession?
Going into a double-dip recession or a W?
Is that where the economy is now headed?
We have been exploring the shape of things
to come ever since the economy tanked.
Our guide two years ago in mid-2009, MIT and
former IMF economist Simon Johnson.
SIMON JOHNSON, Peter G. Peterson Institute
for International Economics: Let me show you
like this.
So here's GDP, gross domestic product.
That's output, what we produce, and here are
years.
PAUL SOLMAN: Johnson sketched the predicted
shapes as of 2009 on a blackboard -- the one
the optimists were pushing at the time, a
V-shaped recovery.
SIMON JOHNSON: If we're a V, we go right back
to the path we had before and you get a V-shape
recession.
And by the time, you know, you reach end of
'09, 2010, you have forgotten about it, right?
You bounce right back.
PAUL SOLMAN: Well, pretty clearly, the V didn't
make it off the drawing board.
So what about the other shapes being bandied
about at the time?
The L of a drawn-out depression with no recovery
in sight.
An even deeper plunge depicted as a lightning
bolt.
A recession brought to you by a bumpy version
of the letter U, small ups and downs in an
economy struggling to recover.
Well, it's now more than two years later.
So we returned to Simon Johnson with, looking
on the bright side, an MIT whiteboard.
SIMON JOHNSON: The good news is we didn't
go back to the Stone Age.
So I think we will take that one off and give
everyone some relief.
It's also not an L. It's not the Great Depression.
It's not stayed down.
The economy has come back to some degree.
So I think we can take that off.
PAUL SOLMAN: What has actually happened?
SIMON JOHNSON: Let me draw you a couple of
pictures.
And I'm going to use an optimistic color,
green -- green for go, go to the future.
So if you think about GDP, here, the story
is not so bad.
So we were growing up until 2007, end of 2007,
early 2008, and we come down pretty sharply,
and then we have some recovery.
Problem is, we're not growing fast enough,
we haven't grown fast enough to keep up with
population growth.
And when you adjust GDP for inflation, we're
about where we were six years ago, end of
the second quarter of 2005.
So it's not a lost decade, but it's a lost
half-decade already.
PAUL SOLMAN: So we have got a kind of -- not
a U, not a bathtub, kind of, I don't know,
a hammock.
(LAUGHTER) SIMON JOHNSON: Right.
It's a hammock.
The economy has gone to sleep on a hammock
and is not waking up.
It should be growing faster, and we should
be getting jobs back.
PAUL SOLMAN: We should be getting jobs back,
says Johnson, but we're not, 14 million Americans
still officially unemployed, using our more
inclusive U-7 statistic, computed and posted
on the Web every month, as many as 28 million
un- or under-employed.
SIMON JOHNSON: If you look at any other post-war
recession, in terms of jobs, what's happened
to employment level, all these other post-war
recessions look like -- something like this.
You go down for 12 months, 18 months, you
come back, you lose maybe 2 percent or 3 percent
of employment maximum.
That's what this one looks like, struggling
to come back.
We have lost 6 percent of employment.
It's off the charts on the employment side
compared to any other post-war recession.
PAUL SOLMAN: Here's what Johnson means.
That jumble of lines at the top tracks total
jobs during every downturn since the Great
Depression and World War II.
Jobs always rebounded fully within, at most,
four years -- the only outlier, that red line
at the bottom, which has been described as
the reclining nude-shaped recession in terms
of jobs.
That little peak is temporary census hires.
SIMON JOHNSON: It's a great description.
Of course, it's also incredibly depressing
for everyone caught up in the middle of this,
because the nature of work changes, and some
jobs are good, maybe get better paid at the
high end.
A lot of jobs get pushed down, down, down
in terms of wages.
I think unemployment is going to come down,
but that doesn't promise prosperity for most
Americans like it used to, like it did in
the post-World War II period, for example.
PAUL SOLMAN: Well, the jobs picture, and,
for that matter, the GDP picture, they both
look like what's happened to Japan, its lost
decade, when you think of their stock market,
the lost two decades.
SIMON JOHNSON: I think it's a fair comparison,
although it's a little bit shocking and disturbing.
In long periods of human history, economies
have shrunk, as well as grown, and that could
be what's happening to us on a per-person
basis.
PAUL SOLMAN: Of course, the greatest global
fear these days has been the crisis in Greece,
in particular Europe in general, which could
conceivably take us all back down.
SIMON JOHNSON: Europe is the problem of the
day and the problem of the year.
If the world economy had just had a big financial
crisis in 2008, and we'd got through that,
then that would be one thing.
But that financial crisis triggered a government
debt crisis in parts of Europe, which they
have been unable to deal with.
So it festers and it goes on/off, on/off,
and it generates a lot of uncertainty and
fear around the world.
And it further damages these rather fragile
financial markets.
PAUL SOLMAN: Back here in America, meanwhile,
we're now four years from the onset of the
great recession.
Using the Great Depression as a benchmark,
that would put us in 1933, the Depression's
very bottom, when President Roosevelt took
over.
Relief followed.
Jobs grew, mostly through government.
One of the most popular movies of that year
was all about recovery, "The Gold Diggers
of '33."
ACTRESS (singing): We're in the money.
ACTRESS (singing): The sky is sunny.
ACTRESS (singing): Old man depression, you
are through.
You done us wrong.
PAUL SOLMAN: Wishful thinking, maybe, but
there's little of this in Hollywood at the
moment, or anywhere else.
SIMON JOHNSON: We're not in the money.
And we don't feel like being exuberant or
even optimistic.
It's not the Great Depression, though.
The Great Depression, you lose 20 percent
of employment.
We only lost 6 percent.
So, let's be a little happy about that difference.
PAUL SOLMAN: But not too happy.
In 1937, President Roosevelt and Congress
cut spending and hiked taxes to balance the
budget.
The economy relapsed, and we now talk about
one long depression lasting until World War
II.
And that might well resonate with our unemployed
executives outside Chicago, like former corporate
real estate executive Denise Pucel.
DENISE PUCEL, former corporate real estate
executive: I was out of work for five-and-a-half
years.
I have just landed a contract position starting
Monday for one-third of the salary I was making
before.
PAUL SOLMAN: After I polled the group on the
likelihood of a double-dip, she said I was
asking the wrong question.
DENISE PUCEL: Poll the question, how many
people think we ever came out of the recession?
PAUL SOLMAN: How many people think we never
got out of the recession?
In stalemated America, that rarest of political
outcomes: a nearly unanimous vote.
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country-region JEFFREY BROWN: The latest job
numbers reinforce the notion that the economy
remains weak when compared to recoveries of
the past Normal Microsoft Office Word JEFFREY
BROWN: The latest job numbers reinforce the
notion that the economy remains weak when
compared to recoveries of the past Title Microsoft
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