[tolbiny]

[ QUOTE ]
defined by joblessness and GNP

[/ QUOTE ]

This is a very poor way to determine how severe an economic downturn is. The flaws of GDP and GNP have been discussed to death so I'll skip those, but unemployment numbers can mean two totally different things during an economic downturn, depending on the conditions prior to the downturn. Lets take the example of savings rates.

1. You have $1,000 worth of savings when you lose your job. You have to start looking for a new one right away and you won't be able to turn down more than one or two opportunities before your forced to take whatever offers around subsistence wage.

2. You have 10,000 saved. You have a lot more options, you can pass on several jobs and probably live for 2-3 months before getting job is a necessity.

3. You are in debt. You have no choice but to take the first offer that comes along or face bankruptcy.

If the average person is in situation 2 then unemployment will be higher during a downturn than if the average person is in situation 3, despite the fact that people are in much more favorable conditions your metric would suppose that situation 2 is a worse down turn than situation 3.

How does this apply with the Fed around? Inflationary tactics like the ones the fed uses favors debt over savings and thus you would expect many more people to be forced into taking the first job that comes to them rather than having time to weigh options and figure out a long term path.

Re Mr mon-
I have to get some books out on the post reconstruction period that you mentioned a few weeks ago as being recession ridden- my knowledge of that time period needs to be fleshed out before it can even be called skimpy.