There are two interesting charts in today’s NYT that compare unemployment numbers and domestic output between recessions over the past 60 years and today. Unemployment trends are beginning to be similar to the worst recessions while decline in output remains mild. An interesting comparison is the recession following the 9/11 terrorist attacks. The US recovered quickly from a GDP perspective but it was somewhat of a jobless recovery. Unemployment remained elevated even while corporate profits soared.
Of course, we now know that much of the record profitablility of the recent past was inflated due to the credit bubble. Nevertheless, it may be that our current recession deals a painful blow to employment but a lesser blow to output. If so, there is some possibility that financial markets may recover even further in advance of the end of bad news than has traditionaly been the case. Just a thought after looking at the charts.