Today’s Recession in Perspective
The Federal Reserve Bank of Minneapolis has put together a nifty site called The Recession in Perspective. It places today's recession into historical context versus the other 10 post-WWII recessions. You can graphically compare the length or depth of today's downturn to your favorite recession (1957? 1990?). I really like this idea. It could be a useful planning tool for your company, especially if you loaded up some historical data from your own markets:
How bad is it?
Where are we in the cycle?
How does this downturn compare to others for our company?
I suspect that the Minneapolis site was originally intended to highlight that things have been worse. Alas, it now documents how bad things have gotten.
Recessions don't last forever. Back in early February, I predicted that we'd be seeing early indicators of recovery by mid-year and begin growing again (slowly) in late 2009 or 2010. So far, that outlook still seems accurate.
Stay tuned next week as I discuss my new 2009 Wholesale Distribution Economic Reports, which include my updated forecasts for all wholesale distribution sectors.
How Bad Is It?
The Fed site inspired me to create this chart, which I now use in executive presentations:
We will probably look back at today as "the bottom" – but it will be a long road back.Since peaking in December 2007, total non-farm payroll employment has dropped by 5.1 million jobs, with more than half of job losses coming within the last five months. That's a loss of 3.7% since the end of 2007, which makes the current recession worse than 1981 based on employment.
Employment in wholesale distribution is down 5.6% since the end of 2007, so the industry is declining more quickly than the overall economy. The biggest job losses in the U.S. economy have occurred in construction and manufacturing industries, which are core customer groups for wholesaler-distributors.
More on the Stimulus
Thanks to everyone who tuned in for my Economic Stimulus webcast. The feedback was extremely positive. Three sample comments:
"The webinar was very well done and useful. Thank you for sharing your analysis"
"Great job today on as wide ranging a subject matter as you can pick for a 90 minute webinar. Thanks for some good insights!"
"Great program with many 'put to use' tools…whosoever idea it was….great idea."
In case you missed it, you can order the DVD and slides from the MDM site.
4 comments:
I always think of 1980-81 as one recession. Does your chart mean that there was a brief period of positive growth somewhere in late '80-early '81?
RS,
Yes. There was a brief and shallow recession in 1980. The 1981 recession began in July 1981 and ended in November 1982. Volcker raised interest rates and contracted the money supply to counteract inflation.
Of course, we may have our own inflation to worry about in 2011-2012...
Adam
Our 3/12 daily sales average is still falling as of the end of March at every branch. We believe we will see bottom in June. We are assuming, however, that we must continue to adjust our business as though the bottom has yet to be determined. Pruning is tough, but should produce a healthier business on the rebound.
I was on the stimulus webcast and thought it was very useful, too. We have put together an internal team to follow up on projects listed on the government websites and already have identified some new business. Thanks!
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