The St. Louis Federal Reserve’s FRED database is a reliable source of entertainment for amateur researchers like me. As I was reading this post at Zerohedge on the changing relationship over time between new unemployment claims and job growth it occurred to me that there was no particular reason to believe that jobless claims shouldn’t increase as the population increased.
I zipped over to FRED and rapidly charted new jobless claims divided by population. The results are above. Sure enough, the troughs have a very slight upwards trend which is what I’d expect. Note, too, that it looks very much as though we’re approaching another trough.
I take this as confirmation of a point I’ve been making for some time: what we’ve experienced in the 2007-2009 economic downturn is a local or regional problem (California, Arizona, Nevada, Florida, Michigan) with national implications.
Unfortunately, policymakers, guided by economists, have responded as though this were the problem they wanted to deal with rather than the one we actually had.
Interestingly, by this gauge the outlier isn’t the 2007-2009 recession but the recession of the early 1980s.
I think that your general theorem that recoveries only last a certain amount of time on average neglects to account for Fed induced recessions. Not that I’m sure they won’t raise rates too early… but if they don’t I think a longer than average recovery is probable.
I don’t think I would characterize my beliefs quite that way. More along the lines of there is such a thing as the business cycle. I have no doubt that with enough ingenuity and effort Congress and the Federal Reserve can prolong any economic downturn virtually indefinitely.