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The · Psychohistorian

Recessions and depressions

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What's the difference between a recession and a depression? A friend of mine once put it this way: a recession is when jobs are lost. A depression is where jobs are lost and they don't come back.

The following graph shows how, unlike every other downturn since World War II, the jobs recovery profile is substantially depressed from a time reversal of the job loss profile:

It's looking like we're in a depression. Not a great depression, just an ordinary depression, but a depression still. The graph is current as of late 2011; a straight line extrapolation indicates we won't see a full employment recovery until 2016. Adjusting for population makes things look even worse, as the line is basically parallel to population increase.

For comparison, here's a graph for the great depression, which while choppier also demonstrates a delayed recovery:

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