monthly labor review apr 2011

8/6/2019 Monthly Labor Review Apr 2011

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Monthly Labor Review April 2011 3

The 200709 Recession: Overview

Employment loss and the 200709recession: an overview

Christopher J. GoodmanandSteven M. Mance

Christopher J. Goodman

and Steven M. Manceare economistsin the Division of

Current EmploymentStatistics in the Oceof Employment andUnemploymentStatistics at the Bureauof Labor Statistics.Email: [email protected] [email protected]

Te downturn in employment accompanying the 200709recession was notable or its prolonged length, or afectingan especially wide range o industries, and or being deeperthan any other downturn since World War II

The U.S. economy is recovering romone o the longest and deepest re-cessions since the end o World

War II (WWII). Virtually no area o theeconomy remained unscathed rom theDecember 2007June 2009 recession,1 par-ticularly the labor market. Nonarm payrollemployment, measured by the Current Em-ployment Statistics (CES) program, peakedin January 2008, 1 month ater the peak inthe business cycle.2 Ater relatively modest

job losses in early 2008, the losses increasedsharply in the latter hal o the year, anddeclines spread beyond traditionally cyclicalindustries.

Te already-weak economy was jolted bynancial market turmoil in all 2008. Teimpact on employment was immediate andsevere, with monthly job losses spiking toamong the highest on record.3 At its lowestpoint, February 2010, U.S. employment haddeclined by 8.8 million rom its prerecessionpeak. (See chart 1.) Te breadth and depth

o the recession, particularly in comparisonwith recent recessions, has led some to labelit Te Great Recession.4 In 2010, the la-bor market stabilized as employment grewmodestly. Despite recent improvements, thelabor market continues to struggle rom theatermath o a historic employment down-turn that is notable or its breadth, depth,and length.

Prelude to the recession

Te 200709 recession was preceded bya period o steady economic growth. Al-though initially slow to recover rom a mildrecession earlier in the decade, the labormarket was healthy overall by 2006. Teunemployment rate was low by historicalstandards, and payroll employment wassteadily expanding.5 Tere remained a ewareas o weakness; or example, employmentin manuacturing and inormation never re-turned to prerecession levels. Nonetheless,most industries were adding jobs.

Employment growth beore the mostrecent recession was centered in three areaso the economy: education, healthcare, and

various industries related to the housingmarket.6 Education and health care havelong been growing industries in terms oboth economic output and employment.7Industries related to housing market activ-ity have historically been more cyclical.8 Te

housing market boomed throughout the rsthal o the 2000s as home prices soared andconstruction activity rose to record levels.9

Te rapid growth in housing drove eco-nomic growth in two ways. First, housingconstruction led to job growth in construc-tion as well as in complementary industriessuch as mortgage nance, real estate, con-struction-related manuacturing, and retail


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4 Monthly Labor Review April 2011

urniture stores. Second, the housing boom also contrib-uted to economic growth in a broader sense through a

positive wealth eect that boosted spending across theeconomy.10 According to the Federal Reserve, U.S. house-holds aggregate real estate assets rose by over a thirdbetween 2003 and 2006.11 Homeowners extracted parto this increased mortgage equity to und consumptionin other areas, such as automobiles and other consumergoods. It is estimated that income extraction rom hous-ing more than doubled between 2001 and 2005, with over$1.4 trillion extracted in 2005 alone.12 By one estimate,this housing-ueled spending accounted or at least one-quarter o the growth in consumer expenditures.13

Despite the economys overall strength, certain seg-ments o it were showing signs o trouble by 2006. Tehousing market, ater serving as one o the key driverso growth throughout much o the decade, was coolingo. New home sales peaked in July 2005, and by Janu-ary 2006 housing starts had begun declining.14 Over thecourse o 2007, the housing credit market deteriorated asdelinquency rates rose and home oreclosures reached lev-els unseen since recordkeeping began in the late 1970s.15

Te decline in credit quality was most pronounced among

nontraditional loans such as subprime loans. Tese non-traditional loans, aimed at borrowers unable to qualiy

or more traditional loans, grew in market share as homeprices rose and homeownership expanded.16

Initially, the negative impact o housing on the broadereconomy appeared to be relativity contained. Areas out-side o housing continued to grow as GDP expanded andemployment grew steadily throughout 2006. However,over the course o 2007, the deepening trouble in housingbegan showing signs o spreading as most major economicindicators leveled o or declined outright. Te unemploy-ment rate, which had edged downward or several years,leveled o in late 2006 and by late 2007 began trendingup. Nonarm employment continued to expand through-out 2007, though at a reduced rate. Over the course othe year, longstanding job losses in manuacturing were

joined by deepening job losses in housing-related indus-tries, such as construction and nance.

Overview of the recession

Weighed down by widespread economic troubles, theeconomy ofcially entered a recession in December 2007.

Chart 1. Total nonfarm employment, monthly data, seasonally adjusted, 200010

Employment(in millions)

Employment(in millions)

140

138

136

134

132

130

128

126

124

122

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

140

138

136

134

132

130

128

126

124

122

NOTE: Shaded areas denote recessions as determined by the National Bureau of Economic Research.SOURCE: Bureau of Labor Statistics, Current Employment Statistics survey.


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Nonarm employment peaked in January 2008 and thenentered a period o steady decline. Losses were heaviestin traditionally cyclical industries such as manuacturingand construction. However, weakness was not conned tothese industries: a growing number o traditionally more

resilient industries such as retail trade and leisure and hos-pitality reported employment declines.

Rising oil prices, which are oten a contributing ac-tor to recessions, urther strained the economy in 2008.Global crude oil production ailed to keep up with de-mand, causing prices to double rom June 2007 to June2008.17 For homeowners already eeling the eects o adecline in the value o their homes, rising energy costscame as an unwelcome development. Personal consump-tion expenditures began to shrink in the rst quarter o2008, particularly expenditures on durable goods such asautos and applianceswhich tend to be highly cyclical.18

Te surge in oil and other commodity prices adverselyaected businesses as well. From July 2007 to July 2008,the Producer Price Index (PPI) or all commodities in-creased by 17.4 percent. Tis was the highest over-the-yearpercent change in this index since 1974, when oil pricessurged ollowing a supply reduction by the Organizationo Arab Petroleum Exporting Countries (OAPEC). Tisoil shock contributed to the 197375 recession.19 One in-dustry that was helped by the boom in commodities prices

was mining, which continued to add jobs through the rsthal o the recession because high prices drove businesses

to extract resources that had been unprotable when pricelevels were lower.20 Commodity prices starting droppingsharply, however, when the recession turned global and

world demand ell. From July 2008 to July 2009, 1 monthater the recession ended, the PPI or all commodities ellby 16.1 percentthe steepest 12-month percent declinesince 1931.

Depth

Te 200709 recession did not progress evenly. Duringthe rst 9 months o the recession, nonarm employment

decreased by 1.2 percent, a change that ell in line with therelatively modest losses o the 199091 and 2001 reces-sions.21 In addition, the distribution o job losses by indus-try during the early stages o the most recent recession wassimilar to that during the two previous recessions. Duringthe rst hal o the 200709 recession and the entirety oeach o the previous two recessions, a little more than halo job losses occurred in manuacturing and construction(which both tend to be sensitive to the business cycle).

Te shallow employment declines did not last, however.

Te economic downturn intensied in September 2008when the economy was jolted by trouble in the Nations -nancial system. In the atermath o the turmoil, credit mar-kets constricted and banks tightened lending standards.22

Te recession rapidly deepened, and job losses spiked.

Monthly job losses averaged 712,000 rom October2008 through March 2009the most severe 6-monthperiod o job losses since 1945, when WWII was ending.During the nal 3 months o the recession, April through

June 2009, job losses remained severe but moderatedsomewhat to an average monthly employment decline o516,000. Despite the ocial end o the recession, non-arm employment declined by another 1.2 million untilreaching a trough in February 2010.

Breadth

Te downturn in employment was notable or the breadtho industries that were aected. (See table 1.) Many in-dustries that added jobs during the rst 9 months o therecession began shedding them, and industries that werelosing jobs began losing them more rapidly. Te CES1-month diusion index, a measure o the breadth o em-ployment losses across industries, ell to 17.0 in March2009, its lowest level since the series began in 1991.23

raditionally, goods-producing industries have experi-enced the largest declines in employment during recessions.

Te 200709 recession was no dierent, with construction

and manuacturing both experiencing their largest per-centage declines o the post-WWII era. Service-providingindustries also experienced large employment declines.Although the percentage declines in private services werenot as large as those in the good-producing industries, they

were the largest on record or private services.Construction was among the hardest hit industries

during the recession.24 Deep employment losses beganin residential construction and spread to nonresidentialconstruction as commercial and industrial projects dwin-dled.25 Since peaking in April 2006, employment in con-struction has allen by 2.2 million, or 28.8 percent, as o

December 2010. Large job losses are not unprecedentedin construction, which is known as a highly cyclical in-dustry. However, even considering the volatile history othe construction industry, the 200709 downturn standsout. Declines rom the prerecession peak in constructionemployment easily exceeded those o the earlier housingbusts in the 1980s and 1990s, and are the steepest sincethe labor dislocations duringWWII.

Manuacturing, which had been losing jobs or 10years beore the 200709 recession, also experienced sig-


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Percent change in employment during recessions, 19452010, seasonally adjusted

Industry

Feb. 1945Oct. 1945

(8 months)

Nov. 1948Oct. 1949

(11 months)

July 1953May 1954

(10 months)

Aug. 1957Apr. 1958

(8 months)

Apr. 1960Feb. 1961

(10 months)

Dec. 1969Nov. 1970

(11 months)

Total nonfarm ........................................................... 7.9 5.0 3.1 4.0 2.3 1.2

Total private ............................................................... 8.2 6.0 3.8 4.9 2.8 2.0

Goods producing .................................................. 17.8 10.6 7.2 8.2 5.3 6.7

Service providing .................................................. .6 1.4 .4 1.5 .6 1.5

Mining and logging ............................................ 10.9 38.7 8.7 9.6 7.5 2.0

Construction ......................................................... 3.4 2.7 .9 5.5 3.9 1.7

Manufacturing...................................................... 19.9 9.8 8.4 8.6 5.4 7.9

Durable goods .................................................... 30.2 15.4 11.2 12.2 7.7 11.0

Nondurable goods ............................................ 1.2 2.6 4.3 3.0 2.2 3.0

Wholesale trade ................................................... 6.9 1.8 .1 1.9 .8 .5

Retail trade............................................................. 3.2 1.1 .7 2.6 2.4 .6

Transportation and warehousing ..................

Utilities .................................................................... 2.1

Information............................................................ 8.3 7.9 6.0 6.8 3.7 2.5

Financial activities ............................................... 4.1 1.5 3.2 1.0 1.9 2.8

Professional and business services ............... 3.0 2.7 1.4 2.6 .1 .7

Education and health services........................ 4.0 .9 1.4 .4 2.3 2.3

Leisure and hospitality ...................................... 2.9 .7 .3 1.8 1.9 1.2

Other services ....................................................... 3.7 1.0 1.5 .4 2.2 2.2

Government .......................................................... 6.2 1.7 1.6 1.4 .6 2.8

Nov. 1973Mar. 1975

(16 months)

Jan. 1980July 1980(6 months)

July 1981Nov. 1982

(16 months)

July 1990Mar. 1991

(8 months)

Mar. 2001Nov. 2001(8 months)

Dec. 2007June 2009

(18 months)

Total nonfarm ........................................................... 1.6 1.1 3.1 1.1 1.2 5.4

Total private ............................................................... 3.1 1.6 3.5 1.3 1.8 6.6

Goods producing .................................................. 10.3 5.0 10.6 4.1 4.9 16.2

Service providing .................................................. 2.2 .4 .4 .3 .4 3.4

Mining and logging ............................................ 11.1 2.8 12.4 1.3 1.5 7.3

Construction ......................................................... 14.3 5.9 8.2 7.5 1.1 19.8

Manufacturing...................................................... 10.2 5.2 11.0 3.2 6.6 14.6

Durable goods .................................................... 10.7 6.5 14.1 4.3 7.5 17.5

Nondurable goods ............................................ 9.4 3.1 5.8 1.4 5.0 9.8

Wholesale trade ................................................... 1.4 .3 2.8 1.4 1.9 7.6

Retail trade............................................................. 0.5 .7 .4 1.7 1.3 6.7

Transportation and warehousing .................. 3.6 3.0 6.1 .3 4.2 7.3

Utilities .................................................................... .2 1.7 3.4 .6 .0 .6Information............................................................ 4.7 2.2 4.7 .3 4.9 7.6

Financial activities ............................................... 1.5 1.4 1.0 .4 .6 5.8

Professional and business services ............... 1.8 .8 .6 1.9 3.8 8.9

Education and health services........................ 4.7 1.9 2.6 3.5 2.6 3.3

Leisure and hospitality ...................................... 1.3 .3 .4 .3 .1 3.4

Other services ....................................................... 4.5 1.9 2.5 .1 2.2 2.5

Government .......................................................... 5.1 1.3 1.2 .4 1.8 .8

NOTE: Dashes indicate data not available.SOURCE: Bureau of Labor Statistics, Current Employment Statistics survey.

Table 1.


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nicant job losses during it.26 Te industrys declines inemployment accelerated sharply during the latest reces-sion. However, some areas o manuacturing did add jobsthrough the rst 9 months o the recession. Machineryand aerospace products and parts manuacturing, both

with a large share o employment dependent on exports,added jobs over that period. Growth in these two indus-tries, however, did not withstand the deepening o theeconomic downturn. Nearly all manuacturing industrieslost jobs over the course o the recession. Manuacturingemployment ell 2.0 million, or 14.6 percent, rom De-cember 2007 through June 2009. Some o the most severe

job losses were in motor vehicles and parts manuacturing,in which employment ell 35 percent during the recession.

Te most recent recession was unique with regard tothe breadth and depth o the employment decline in pri-

vate service-providing industries. (See chart 2.) Collec-tively, private service-providing industries have accountedor the majority o job growth over the past 20 years andhad previously avoided large job losses during recessions.As the downturn began in late 2007, employment lossesspread beyond the housing-related and goods-producingindustries to aect the private service-providing industries

on the whole. Ater peaking in January 2008, employmentin private services declined or the next 21 months. Virtu-ally all private service-providing industries were aected,particularly those related to housing and autos. Financialactivities, retail and wholesale trade, transportation and

warehousing, inormation, temporary help, and leisureand hospitality all experienced their largest sustained joblosses on record.27

Few industries attracted as much attention during therecent downturn as nancial activities. Beore the down-turn, the nancial industry expanded rapidly or several

years as credit and other nancial markets grew.28 As thehousing market weakened in 2006, however, job growth innancial activities altered. Employment in that industrypeaked in December1 year beore the ocial start o therecession. Te industry shed 126,000 jobs in 2007. Initially,employment losses were relatively modest and containedin those industries within nance that are most closelyconnected to housing. However, by September 2008, losseshad spread throughout the industry; virtually every com-ponent o nance was aected by the nancial crisis. Joblosses in nance continued ater the recession ended. Be-ore 2007, the only recession (since 1939) to see job losses

Number of months from start of recession

198182 recession

Chart 2. Employment in private service-providing industries, seasonally adjusted

Index

[start of recession = 0]

Index

[start of recession = 0]8

6

4

2

0

2

4.

6

86 4 2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36

NOTE: Business cycle peaks are determined by the National Bureau of Economic Research.SOURCE: Bureau of Labor Statistics, Current Employment Statistics survey.

8

6

4

2

0

2

4

6

8

197375 recession

200709 recession

199091 recession

2001 recession


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in nancial activities was that o 199091, when the indus-try was struggling with the savings and loan crisis.

Outside o nance, retail trade and leisure and hospi-talityconsumer-oriented industriesexperienced re-cord employment declines.29 During the recession, these

industries lost 1.0 million and 454,000 jobs, respectively.As incomes and wealth declined during this period, con-sumers increased their savings rates and reduced spendingon discretionary purchases such as consumer electronics,travel, and restaurant meals.30

Employment in proessional and business services,a broad industry which includes a variety o servicesrom administrative and waste services to accounting andbookkeepingdeclined by over 1.6 million during themost recent recession. In absolute terms, this decline wassecond only to that in manuacturing, and representeda sharp reversal rom the robust growth in employmentduring the preceding 5 years. Roughly hal o the lossesoccurred within the temporary help services industry,

which is widely viewed as an indicator o coming trendsin overall nonarm employment. emporary help employ-ment peaked in August 2006, 17 months beore the peakin total nonarm employment, and started adding jobs 6months beore overall employment reached its trough.

Education and health services was by ar the largestprivate industry, as measured by employment, to add

jobs during the recession. Employment in education andhealth services has grown regardless o the business cycle

phase or more than 30 years. Tis industry provides criti-cal services to an ever-growing population. Despite thegains, the industry was not completely immune to therecession; its rate o employment growth slowed rom itsrate o growth in the 3 years preceding the recession.

At its lowest point in October 2009, employment inprivate service-providing industries had allen by 4.6 mil-lion rom its previous high in January 2008, the steepestdecline in the history o the series. Employment lossesin private service-providing industries were also unprec-edented with regard to their share o total nonarm em-ployment losses. In previous downturns, private services

typically have accounted or around one-quarter o totalnonarm employment losses. In the recent downturn,however, they accounted or nearly hal o the total de-cline, well above the previous record.

Overall, government employment grew during the200709 recession. Federal Government employment (ex-cluding temporary Census workers) grew by 48,000 romDecember 2007 through June 2009. State and local gov-ernments added jobs during the rst several months o therecession, but ater employment reached a high point in

August 2008, they shed 68,000 jobs through the end o therecessiona decline o about 0.3 percent. (See chart 3.)Employment in State and local government tends not toall during recessions, and job growth in these areas actu-ally accelerated during the 199091 and 2001 recessions.31

State and local governments have less fexibility thanthe Federal Government to run decits; nearly all Stategovernments have some orm o a balanced-budget re-quirement.32 State tax revenuesreceived primarily romincome, sales, and gross receipts taxesare sensitive tothe business cycle, and they began to all on an annualbasis ater September 2008.33 Falling revenues put pres-sure on States to cut employment, which they began todo ater August 2008. In order to shore up State budgets,nearly 60 billion dollars o scal relie was given by theFederal Government to the States in 2009 as part o theAmerican Recovery and Reinvestment Act. Tis stimuluspackage was also intended to help local governments staveo job cuts.34

Local governments, unlike State governments, did notsee a drop in tax revenue. Local government tax revenuescome mostly rom property taxes, which continued to growthroughout the recession despite declining home values.35But, according to the National League o Cities, revenuegrowth was outpaced by spending growth in 2008 and2009, and local governments began reducing employmentater September 2008 in order to cover budget shortalls.36

Te recession led not only to employment losses, but

also to cuts in workers hours.

37

In June 2009, averageweekly hours o all employees had allen by 1 hour to 33.7hours rom the peak in June 2007. Aggregate hours, theproduct o employment and average weekly hours, ellby 9.8 percent between June 2007 and October 2009. As2010 came to a close, aggregate hours were still 7.6 per-centage points below their prerecession peak.

Length

Te United States has experienced 11 periods o sustainedemployment declines since the inception o the CES survey

in 1939. Large declines in employment tend to be associ-ated with recessions. (See charts 4 and 5.) However, peaksand troughs in employment generally do not directly align

with the ocial starting points and endpoints o reces-sions. Between January 2008 and February 2010, employ-ment ell by 8.8 millionthe largest absolute decline inthe series history. Te previous record was 4.3 million net

jobs lost rom November 1944 to September 1945.It is hard to generalize given the dierences in depth

and duration among employment downturns, but the


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average employment decline beore the most recent re-

cession resulted in a drop in employment o 3.6 percentand lasted 15 months. (See table 2). Te most recent em-ployment decline, rom 2008 to 2010, was a 6.3-percentdecrease and lasted 25 months. In percentage terms, therecent decline is exceeded in depth only by that whichoccurred as WWII was ending. Measured by duration,only the 30-month employment downturn rom Febru-ary 2001 to August 2003 was longer than the most recentdownturn.

In addition to its depth and length, the recent down-turn is unique in that it is the rst on record to have erasedall o the jobs gained in the previous economic expansion.

Tis situation resulted not only rom the sharp decline inemployment, but also rom relatively tepid job growth inthe preceding expansion. From August 2003 to January2008, employment grew by 6.3 percent, its weakest expan-sion sinceWWII. From the end oWWII to the expansionthat ended in February 2001, the average employmentexpansion had been a gain o 17.8 percent. In February2010, employment was 576,000 below its previous cyclelow, August 2003. Beore the most recent recession, at theend o boom-and-bust cycles the overall employment lev-

el had always remained well above where it started, even

ater the worst declines.

HE U.S. LABOR MARKE IS CURRENLY RECOV-ERING rom the deepest employment downturn since theend o World War II. Not only were there heavy losses inemployment; the downturn was notable or its length andor the breadth o industries aected. Te downturn startedin the housing-related and good-producing industries in2006. Over the course o 2008, the pace o declines acceler-ated as employment losses spread to private service-pro-

viding industries. Economic output resumed in late 2009,and employment reached a trough in February 2010. In

addition to the positive signs in overall employment, thereare two other measures that suggest rming in the labormarket. Average weekly hours and employment in tempo-rary help services, both traditionally viewed as precursorso nonarm employment trends, both have increased sincetheir lows in June 2009 and August 2009, respectively. De-spite the improvements in 2010, employment remains 7.7million jobs below its prerecession peak as o December2010, while the economy continues to struggle with thelargest employment decline sinceWWII.

Chart 3. Federal, State, and local government employment, excluding temporary Census employment,June 2007December 2010, seasonally adjusted

4

3

2

1

0

1

26 4 2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36

NOTE: Business cycle peaks are determined by the National Bureau of Economic Research.SOURCE: Bureau of Labor Statistics, Current Employment Statistics survey.

4

3

2

1

0

1

2

Federal Government

State government

Local government


Index[start of recession = 0]



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Chart 4. Total nonfarm employment, seasonally adjusted, selected recessions, 194558, and the 200709 recession

6 4 2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36

NOTE: Business cycle peak as determined by the National Bureau of Economic Research.SOURCE: Bureau of Labor Statistics, Current Employment Statistics survey.

8

6

4

2

0

2

4

6

8

10

1945 recession 200709 recession

195354 recession

195758 recession

194849 recession

8

6

4

2

0

2

4

6

8

10




Chart 5. Total nonfarm employment, seasonally adjusted, selected recessions, 19732009

6 4 2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36

NOTE: Business cycle peak as determined by the National Bureau of Economic Research.SOURCE: Bureau of Labor Statistics, Current Employment Statistics survey.

198182 recession

197375 recession

200709 recession

199091 recession

2001 recession




8

6

4

2

0

2

4

6

8

10

8

6

4

2

0

2

4

6

8

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Notes

1 Recessions are identied by the National Bureau o EconomicResearch (NBER). According to the NBER, the most recent recessionbegan in December 2007 and ended in June 2009. Te previous tworecessions were rom March 2001 to November 2001 and rom July1990 to March 1991. For a complete list o business cycle dates, consultthe NBERwebpage at http://www.nber.org/cycles/cyclesmain.html(visited Nov. 2, 2010).

2Te data on employment used in this article are rom the CESsurvey, which is a monthly survey o approximately 140,000 non-arm businesses and government agencies representing approximately440,000 individual worksites. For more inormation on the CES pro-grams methods, see echnical Notes to Establishment Survey DataPublished in Employment and Earnings at http://www.bls.gov/web/cestn2.htm (visited Mar. 31, 2011). CES data are available at http://www.bls.gov/ces (visited Mar. 31, 2011). Te CES data used in thisarticle are seasonally adjusted unless otherwise noted.

3Te current CES monthly total nonarm payroll employment se-ries goes back to January 1939.

4Te term Great Recession has been used in numerous publica-tions and is now considered an accepted term by the Associated Press.

5Te data on unemployment rates used in the article are rom theCurrent Population Survey (CPS). CPS data are available at http://www.bls.gov/cps (visited Mar. 31, 2011). Te CPS data used in thearticle are seasonally adjusted unless otherwise noted.

6 Housing is not a dened industry. Activity related to the housingmarket cuts across a variety o industries and includes activities such asresidential construction, nancial activities, manuacturing, and retailsales.

7 For a complete overview o health care employment trends, see

Nonfarm expansions and contractions in employment, seasonally adjusted, 19452010

Expansions Contractions

Employmentcontraction

as percent ofexpansionTrough to peak

Change inemploy-

ment (inthousands)

Percent

change

Length

(inmonths)

Annual-ized

growthrate

Peak to trough

Change inemploy-

ment (inthousands)

Percent

change

Length

(inmonths)

Annual-ized

growthrate

Nov 1943Sep 1945 4,319 10.1 22 9.2 . . .

Sep 1945Sep 1948 6,794 17.6 36 5.6 Sep 1948Oct 1949 2,344 5.2 13 4.8 34.5

Oct 1949Jul 1953 7,586 17.7 45 4.4 Jul 1953Aug 1954 1,711 3.4 13 3.1 22.6

Aug 1954Apr 1957 4,413 9.0 32 3.3 Apr 1957Jun 1958 2,326 4.4 14 3.8 52.7

Jun 1958Apr 1960 3,900 7.7 22 4.1 Apr 1960Feb 1961 1,256 2.3 10 2.7 32.2

Feb 1961Mar 1970 17,897 33.4 109 3.2 Mar 1970Nov 1970 1,044 1.5 8 2.2 5.8

Nov 1970Jul 1974 8,225 11.7 44 3.1 Jul 1974Apr 1975 2,171 2.8 9 3.7 26.4

Apr 1975Jul 1981 15,131 19.8 75 2.9 Jul 1981Dec 1982 2,838 3.1 17 2.2 18.8

Dec 1982Jun 1990 21,061 23.7 90 2.9 Jun 1990May 1991 1,621 1.5 11 1.6 7.7

May 1991Feb 2001 24,334 22.5 117 2.1 Feb 2001Aug 2003 2,708 2.0 30 .8 11.1

Aug 2003Jan 2008 8,174 6.3 53 1.4 Jan 2008Feb 2010 8,750 6.3 25 3.1 107.0

SOURCE: Bureau of Labor Statistics, Current Employment Statistics survey.

Table 2.

Catherine A. Wood, Employment in health care: a crutch or the ail-ing economy during the 200709 economy, Monthly Labor Review,this issue, pp. 1318.

8

Richard K. Green, Follow the Leader: How Changes in Resi-dential and Non-residential Investment Predict Changes in GDP,Real Estate Economics, June 1997, pp. 25370. Tis article looks atthe relationship between GDP and residential investment and non-residential investment. Green nds that residential investment tends tobegin rising beore the trough o the business cycle begin alling beorethe peak. Nonresidential investment lags the overall business cycle andappears to be more a symptom than a cause o economic downturns.

9 Data on new housing starts, permits, and home sales are producedby the U.S. Census Bureau. For more inormation on starts andpermits, see http://www.census.gov/const/www/newresconstindex.html (visited Dec. 22, 2010). For more inormation on new homesales levels and prices, see http://www.census.gov/const/www/newressalesindex.html (visited Dec. 22, 2010).

10 Eric Belsky and Joel Prakken, Housing Wealth Efects: Housings Impact on Wealth Accumulation, Wealth Distribution and ConsumerSpending (Cambridge, Mass., Harvard University, Joint Center orHousing Studies, 2004), http://www.jchs.harvard.edu/publications/nance/w04-13.pd(visited Mar. 31, 2011). BusinessDictionary.comdenes the wealth eect as changes in aggregate demand caused bychange in the value o assets such as stocks, bonds, gold, property andexplains, Increase in the market value o these assets induces a eelingo being richer in their owners (even i no additional cash is realized)and oten tends to encourage spending and to dampen savings. Seehttp://www.businessdictionary.com/denition/wealth-efect.html(visited Dec. 22, 2010).

11 Data on U.S. household real estate assets are rom the Federal


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Reserves Flow o Funds release. See http://www.ederalreserve.gov/RELEASES/z1/Current/z1r-5.pd(visited Dec. 19, 2010). Te net

worth o households and nonprot organizations rose by 39.9 percentbetween 2003 and 2006.

12 Alan Greenspan and James Kennedy, Sources and Uses o Equity Extracted rom Homes (Washington, DC, Board o Governors o the

Federal Reserve System, March 2007), http://www.ederalreserve.gov/pubs/FEDS/2007/200720/200720pap.pd (visited Dec. 15,2010); see table 2 on pp. 1625.

13 Belsky and Prakken, Housing Wealth Efects.14 http://www.census.gov/const/www/newresconstindex.html.15 Data on delinquency are rom the Mortgage Bankers As-

sociations National Delinquency Survey. See http://www.mbaa.org/ResearchandForecasts/ProductsandSurveys/NationalDelinquencySurvey.htm (visited Mar. 31, 2011).

16 Danielle DiMartino and John V. Duca, Te Rise and Fall oSubprime Mortgages, Economic LetterInsights rom the FederalReserve Bank o Dallas, November 2007, http://www.dallased.org/research/eclett/2007/el0711.html (visited Jan. 7, 2011).

17

James D. Hamilton, Causes and Consequences o the Oil Shock o 200708 (Washington, DC, Brookings Institution, February 2009,revised March 2009), http://www.brookings.edu/economics/bpea/~/media/Files/Programs/ES/BPEA/2009_spring_bpea_papers/2009_spring_bpea_hamilton.pd (visited Mar. 31, 2011).Crude oil prices are rom the Bureau o Labor Statistics Producer PriceIndex program, series WPU056, and were extracted on Dec. 23, 2010.

18able 2.3.1, Percent Change From Preceding Period in Real Per-sonal Consumption Expenditures by Major ype o Product (Bureauo Economic Analysis, National Income and Product Accounts),www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=61&Freq=Qtr&FirstYear=2008&LastYear=2010 (visited Dec. 23, 2010).

19 Hamilton, Causes and Consequences o the Oil Shock o 200708.20 For an overview o mining employment trends, see Brian Da-

vidson, Mining employment trends o 200709: a question o prices,Monthly Labor Review, this issue, pp. 1923.

21 Both the 199091 and 2001 recessions lasted 8 months, but em-ployment continued to decline ater the end o both recessions.

22 Data on lending standards are available rom the Federal ReserveBoards Senior Loan Ocer Opinion Survey on Bank Lending Prac-tices. See http://www.ederalreserve.gov/boarddocs/snloansurvey/(visited Mar. 31, 2011).

23Te CES 1-month diusion index measures the dispersion o em-ployment change across industries over the month. Te overall index iscalculated rom 267 seasonally adjusted employment series (primarily4-digit NAICS industries) covering all nonarm payroll employmentin the private sector. o derive the index, each component industry isassigned a value o 0 percent, 50 percent, or 100 percent, depending on

whether its employment showed a decrease, no change, or an increase,respectively, over the month. Te average value (mean) is then calcu-lated, and this percent is the diusion index number.

24 For an overview o trends in construction employment, see AdamHadi, Construction employment peaks beore the recession and allssharply throughout it,Monthly Labor Review, this issue, pp. 2427.

25 Nonresidential construction spending is based upon the Bureauo Economic Analysiss nonresidential structures investment compo-

nent oGDP. See able 1.1.6, Real Gross Domestic Product, ChainedDollars (Bureau o Economic Analysis), line 8, http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=6&FirstYear=2009&LastYear=2010&Freq=Qtr(visited Jan. 8, 2011).

26 For a complete overview o manuacturing employment trends,see Megan M. Barker, Manuacturing employment hard hit during

the 200709 recession,Monthly Labor Review, this issue, pp. 2833.27 For an overview o temporary help employment trends, see Frank

Conlon, Proessional and business services: employment trends in the200709 recession,Monthly Labor Review, this issue, pp. 3439.

28 For an overview o trends in nancial activities employment, seeGeorge Prassas, Employment in nancial activities: double billed byhousing and nancial crises, Monthly Labor Review, this issue, pp.4044.

29 For an overview o retail trends, see Michael D. McCall, Deepdrop in retail trade employment during the 200709 recession,Monthly Labor Review, this issue, pp. 4548. For an overview o trendsin leisure and hospitality employment, see Eliot Davila, Employmentin leisure and hospitality departs rom historical trends during 200709 recession,Monthly Labor Review, this issue, pp. 4952.

30 O their trolleys, Te Economist, May 7, 2009, http://www.economist.com/nance/displaystory.cm?story_id=13611284 (vis-ited Dec. 22, 2010).

31Julie Hatch, Employment in the public sector: two recessionsimpact on jobs, Monthly Labor Review, October 2004, pp. 3847,http://www.bls.gov/opub/mlr/2004/10/art3ull.pd (visited Apr. 4,2011).

32 See NCSL Fiscal Brie: State Balanced Budget Provisions(Washington, DC, National Conerence o State Legislatures, October2010), http://www.ncsl.org/documents/scal/StateBalancedBudgetProvisions2010.pd(visited Jan. 12, 2010).

33 Quarterly Summary o State and Local ax Revenue (U.S.Census Bureau), http://www.census.gov/govs/qtax/ (visited Jan. 12,2011).

34 Te Economic Impact o the American Recovery and Reinvestment Acto 2009, Second Quarterly Report(Washington, DC, Council o EconomicAdvisors, Jan. 13, 2010), p. 10, http://www.recovery.gov/About/Documents/100113-economic-impact-arra-second-quarterly-report.pd(visited Dec. 23, 2010); Christopher W. Hoene and MichaelA. Pagano, City Fiscal Conditions in 2009 and City Fiscal Conditionsin 2010 (Washington, DC, National League o Cities) http://www.nlc.org/ASSETS/E0A769A03B464963A81410F40A0529BF/CityFiscalConditions_09%20(2).pd and http://www.nlc.org/ASSETS/AE26793318A645C795C9CD11DAB3B39B/RB_CityFiscalConditions2010.pd(visited Jan. 12, 2011). Municipalitiesrely on State unding or about 12 percent o their budgets.

35 Quarterly Summary o State and Local ax Revenue. Local taxrevenues were calculated as the dierence between the national total o

State and local government tax revenue and the national total o Statetax revenue.

36 City Fiscal Conditions in 2009 and City Fiscal Conditionsin 2010. Te years reerred to are the 2008 and 2009 scal years, asdened by individual municipal corporations.

37 For an overview o trends in average weekly hours, see StevenKroll, Te decline in work hours during the 200709 recession,Monthly Labor Review, this issue, pp. 5359.