By now, most of the people following the financial crisis closely have seen the following graph (left).
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- Job losses during recessions
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- Job market recovery vs year of recession
It shows the job recovery during all the financial recessions in US after WWII. As you can see the unemployment curve is symmetric. Looking at the current crisis data, if the historic analysis is valid, we can conclude we are not even half way through. An interesting trend in the graph is that the time to recovery has been increasing. This should be due to the more effective govermental policies to control the crisis and its damage to job market. These policies effectively has flatten and elongated the unemployment curve. To see this trend we plotted the number of months that it took the job market to recover vs the year that recession started (right). The linear fit is not a good fit but if it is of any clue, in the current crisis the job market will take around 36 months to recover.
