Comparing job losses after major financial crises

I have a hard time explaining to friends, acquaintances, students, and readers why I’m relatively satisfied with the actions of the Fed, of the Obama administration, and of other entities in their response to the recent deep recession, especially the financial crisis that began in 2008.

Today, Calculated Risk pointed toward Checking in on Financial Crises Recoveries by Josh Lehner with the Oregon Office of Economic Analysis (not a source I’ve ever imagined using!).

From Lehner’s post:

However, when the Great Recession is compared not to other U.S. cycles but to the Big 5 financial crises and the U.S. Great Depression (thanks to U.S. Treasury for adding that to the graph), the current cycle actually compares pretty favorably. This is likely due to the coordinated global response to the immediate crises in late 2008 and early 2009. While the initial path of both the global and U.S. economies in 2008 and 2009 effectively matched the early years of the Great Depression – or worse – the strong policy response employed by nearly all major economies – both monetary and fiscal – helped stop the economic free fall.

The post includes several great graphs, including this one:

Sure, there are lots of differences in these crises, but we nevertheless had every reason to expect that employment would be impacted long after the recession ended.

There are certainly things that could have been done at the federal level — and to a lesser extent at the state and local levels — that could have softened the decline somewhat and put us on a slightly steeper recovery curve. But most of those potential moves would have been either politically impossible or would have carried other risks.