economics | July 09, 2013

Recession Vs. Depression: Justin Fox On Learning From Past Mistakes

Justin Fox says it could take at least another year to raise employment numbers back to pre-recession levels. Last month, the U.S. added 195,000 (seasonally adjusted) non-farm jobs. However, the business speaker says we need to experience 12 more months like that before the country will be back on track, job-wise. At the onset of the current Great Recession, employment peaked at 139 million non-farm jobs, Fox cites in The Harvard Business Review. That was back in November 2007. "The fact that it's going to take close to seven years, if all goes well over the next year, just to get us back to that level is an indication of how bad the recession was and how weak the recovery has been," Fox writes.

Even if we do return to pre-2007 levels, it doesn't mean that everything is business-as-usual. When you adjust for the number of new immigrants to the country and increased population (about 17 million between 2007 and 2014) Fox argues that you actually need millions of new jobs to fix the labor shortage. "No other U.S. recession since World War II has been nearly this devastating to employment," Fox adds.

On a more positive note, Fox says that we're doing quite well when you compare the job losses in this Recession to those of the Great Depression. Similar to today's current economic state, The Depression was "the last U.S. downturn brought on by a severe financial crisis," Fox says. When you look at the percentage of job losses from 1929 to 1939, Fox says, "they make for a much scarier jobs chart than the current recession." So it seems that we've learned something from our past mistakes. Albeit, Fox concludes, probably not enough. Fox is a leading voice on financial matters and market conditions and is the author of The Myth of the Rational Market. He is also the editorial director of the Harvard Business Review Group.

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