Casey Mulligan writes:
You may have noted the contrast between this year’s employment performance and GDP performance. When productivity grows, output can grow even while employment falls. We are in a recession (and have been since late 2007) by the employment definition (NBER uses this) but not yet by the GDP growth definition. We likely will finish 2008 with more GDP than in any year in history, yet less employment than in 2007. The GDP and productivity performance is quite different from “severe recessions.” What is severe about the 2008 economy is the news coverage, and the assault on the taxpayer!
Mulligan’s insight on the crisis is quite unique (and often spot-on). His blog is quickly becoming one of my favorites. You can also check out Mulligan’s commentary on the crisis over at Cato Unbound along with that of our friend Larry White.