Pretty charts. Ugly news.

A few pretty and devastating graphs.

First: Percentage job loss from peak during post WWII recessions (Calculated Risk):

Second: year-over-year delinquency rate changes, where red indicates an increased rate and green indicates a decreased rate (New York Federal Reserve):

Third: the current delinquency rate as of the second quarter of 2009, where a darker color indicates a higher rate (ibid):

"Who Gains from President Obama's Stimulus Package...And How Much?"

I recommend everyone at least read this summary of a recent publication by two economists at The Levy Economics Institute of Bard College (summary taken from this website):

"In this Special Report, Levy scholars Ajit Zacharias, Thomas Masterson, and Kijong Kim provide a preliminary assessment of the 2009 American Recovery and Reinvestment Act (ARRA), a package of transfers and tax cuts that is expected to provide relief to low-income and vulnerable households especially hurt by the economic crisis, while at the same time supporting aggregate demand. By the administration’s estimate, ARRA will create or save approximately three and a half million jobs by the end of 2010; while the ameliorating impact of the stimulus plan on the employment situation is surely welcome, say the authors, the government could have achieved far more at the same cost by skewing the stimulus package toward outlays rather than tax cuts. Their analysis points toward the necessity for a comprehensive employment strategy that goes well beyond ARRA. The need for public provisioning of various sorts—ranging from early childhood education centers to public health facilities to the “greening” of public transportation—coupled with the severe underutilization of labor, naturally suggests an expanded role for public employment as a desirable ingredient in any alternative strategy."

If you are interested in reading the complete article (only four-and-a-half pages), it can be directly downloaded here.

killing time at work

I really liked this article, which is basically a roundup of thoughts on how the recession is affecting New York.

The parts I found especially interesting are about how the negative psychological effects of being laid off are carried with you for years to come, and that being laid off now hurts your income potential 10 years from now. From personal experience, I can tell you that while I’m in a MUCH better place emotionally than I was during my three months of unemployment, the depression I felt then still sorta hangs with me (the article calls it “scarring”). The piece also discusses a study revealing that kids who graduate college during a recession have a lower earning potential throughout their entire careers than those who don’t (great). In the end, though, you get to read about John Sexton being verbose, creating absurd acronyms, and – one can only assume – hugging the reporter.

Scary econ. graph of the day, part 2

Ask and ye shall receive, even the anonymous amongst us. The above graph, based on FDIC data, shows the percentage of FDIC insured financial institutions to fail or receive assistance each year between 1934 and 2007. I could not find data on the number of institutions insured beyond 2007, when there were 7,283 institutions, three of which failed and zero of which received assistance. In 2008 thirty institutions failed or received assistance, and assuming the number of institutions did not change from 2007 this gives us a failure plus assistance rate of 0.412%. In 2009 so far twenty-three institutions have failed, and, using the same method of approximation as was used for 2008, this give us a failure plus assistance rate for this year (so far) of 0.316%.

To directly answer the two anonymous concerns:
1. Graph is now in terms of percentage and the trend remains. By the way, I totally agree with this critique. Thanks for reminding me to keep everything in relative terms;
2. I agree that the high failure rate in the late 1980s and early 1990s likely lowered the number of banks in existence, thereby lowering the absolute number of failures in future years. (Am I wrong in thinking that this could push the percentage of failures either higher or lower depending on other factors? If the remaining banks are healthier overall the failure percentage will decline in the future, but if there are still a bunch of unhealthy banks just waiting to fail then the failure rate will rise.) It also must be recognized that in the late-1980s and early- to mid-1990s there was a big push for de-regulation that significantly increased the likelihood of bank mergers and thereby pushed the number of existing institutions down. In fact, "From 1980 to 1994, there was an average of 423 mergers per year—a total of 6,347 mergers, which amounted to 43 percent of all banks in existence in 1980" (source). I don't have an answer as to the effect of each of these forces, but you can see the overall trend clearly in this graph:

Scary economic graph of the day

Update

I have no witty comments or editorials on this article, but I thought it would be worth posting for those of you who have not seen this news/discussion about the USPS and service cuts.


[As I was attempting to choose the labels for this post, I didn't know whether to put recession or depression. Yesterday, a colleague of mine facetiously pointed out that people with jobs tend to call it a recession, those without, a depression. So, it's a recession for me.]

Good Article on Economy

There's nothing particularly outstanding about the content of this article, but as I read it, I realized I wish all economic articles were written this way. It assumes the reader doesn't have a Ph.D. in economics but is smart enough to grasp an outline of the ideas. I really appreciate that, and apparently I'm not alone in wishing more articles struck the balance.