Between May 2008 and May 2009, according to the latest estimates, the San Diego economy lost 52,200 jobs. This 4 percent year-over-year decline is the fastest we’ve yet experienced during the current downturn.
The below graph shows the rate of job loss for the overall San Diego economy in orange. As usual I’ve also included the three sectors — construction, finance, and retail — that I have long contended grew unsustainably large as a result of the housing bubble. The green line indicates changes in employment outside the three bubble sectors:
And here is a graph that is similar but adjusts for sector size by displaying the losses in percentage terms:
The next graph provides a look at the changing character of the downturn over time. Earlier in (and even before) the recession, the bubble sectors were cumulatively losing a lot of jobs. But the rest of the economy, denoted in green on the graph, soldiered on, for a long time offsetting the bubble sector losses.
In mid-2008, things changed. Job growth in the sectors that hadn’t been directly inflated by the housing bubble started to wane, and by the end of 2008 the rest of the economy was shrinking along with the bubble sectors. At this point, jobs are being lost faster outside the bubble sectors than within them:
The year-over-year rate of change graphs above don’t really give a feel for the cumulative hit that the long-suffering bubble sectors have suffered. That’s what I’m trying to indicate with this next graph, which displays the total percent change in the various sectors since May 2007. It makes clear that while the non-bubble sectors are shrinking now, over the course of the downturn they have not done so nearly as much as their bubble-dependent brethren:
Here’s the monthly update of the unemployment rate as compared to the prior two recessions. While down from the March unemployment high, we are still flirting with the highs and well above what was seen in the prior two downturns:
Now, for something positive. It seems to me like a lot of people take these high unemployment figures as a sure sign that the downturn is going to get worse. But that’s not how it has worked in the past. The following graph, taken from a chart-generating website called economagic.com that dorks like me think is totally cool, displays the unemployment rate for the past 60 years (as far back as the site’s data goes). The red regions on the graph indicate recessions. (There are various definitions of what exactly a recession is, but for our purposes it’s good enough to say that the red regions denote periods of economic contraction).
What the graph makes clear is that over the time period in question, the unemployment rate has never begun to decline until the recession was either already over or imminently so. In many cases, unemployment kept rising for quite some time after the recession had ended and economic growth had resumed.
While high unemployment carries a big economic, social, and emotional impact, the unemployment rate has never been a good predictor of when the economy would start growing again. So unless This Time Is Different, the nasty rate of unemployment depicted above does not, by itself, indicate that things will get worse from here.
— RICH TOSCANO