Economic crisis. Stay the course. False Dawns.

A couple of days ago, the official state economist of my wonderful state--Oregon--came out with the depressing news that unemployment had reached 12.1 percent. It simply is beyond awful that one in eight Oregonians interested in being productive has not been able to find work :-(
I told my students that we would find out on Friday whether Oregon is the worst in the country, in terms of unemployment rate. Turns out that Michigan beat us, not by much though. With 12.6 percent unemployment rate, Michigan is in quite a slump. The question for Michigan is whether the state would end up matching its 1982 record of 16.9 percent unemployment.

Chris Wilson at Slate has put together a really neat animated graphic where he shows, by county, that:

As early as August 2007, for example—several months before the recession officially began—jobs were already on the decline in southwest Florida; Orange County, Calif.; much of New Jersey; and Detroit, while other areas of the country remained on the uptick.

Too bad that the interactive map that Wilson has done is not available with an embedding option.

Given that employment is still at an awful stage, I am beginning to get ticked off when media reports focus only on the ups and downs in the stock market indices. All the more the reason why I appreciated Krugman's column, where he notes:

The 2001 recession officially lasted only eight months, ending in November of that year. But unemployment kept rising for another year and a half. The same thing happened after the 1990-91 recession. And there’s every reason to believe that it will happen this time too. Don’t be surprised if unemployment keeps rising right through 2010.

How much ever we might be upset and frustrated with everything from TARP, AIG, foreclosures, GM, ...., we have no option but to keep up with trying everything possible to prevent a global depression. We simply have no choice in this. Again, way better to channel Krugman's words:

History shows that one of the great policy dangers, in the face of a severe economic slump, is premature optimism. F.D.R. responded to signs of recovery by cutting the Works Progress Administration in half and raising taxes; the Great Depression promptly returned in full force. Japan slackened its efforts halfway through its lost decade, ensuring another five years of stagnation.

The Obama administration’s economists understand this. They say all the right things about staying the course. But there’s a real risk that all the talk of green shoots and glimmers will breed a dangerous complacency.

So here’s my advice, to the public and policy makers alike: Don’t count your recoveries before they’re hatched.