Welcome to the Double-Dip Recession

It's Baaaaaack!

Whether or not the National Bureau of Economic Research ultimately agrees, we are now entering the second dip of a double-dip recession. This is because jobs are what really matter to most Americans, and the employment situation is getting worse, after a scant four months of getting better.

From a theoretical point of view, another recession is what we should expect right now. This is because both GDP and employment are driven by private business investment, and huge tax increases on both business income and capital investment are now only six months away. However, the oncoming recession is also visible in the numbers.

In terms of total employment (BLS Household Survey), there have been nine recessions since 1950. The current downturn is the worst by far. Total employment declined for 25 months from its peak in November 2007, and the total job loss in percentage terms (5.93%) was nearly twice as great as that of any previous post-war recession. The recovery from the employment downturn has also been the most anemic. If the average rate of increase in total employment seen in the past six months were to be sustained (which it probably will not be), it would take until March 2013 to get back to the number of jobs that we had in November 2007. In the meantime, the number of working-age Americans would have increased by almost 10 million.