The Great Recession is once again earning its name.
The median duration of unemployment right now is about 26 weeks, which is the maximum period of unemployment benefits when they are not extended.
Many people who have been receiving extended unemployment benefits (the maximum length is 60 to 99 weeks depending upon your state), are seeing those benefits run out. The proposed deal in Congress simply keeps the maximum duration of unemployment benefits from reverting to 26 weeks over the next thirteen months, it does not extend the limits already in place. More than six million people have been unemployed for more than twenty-six weeks, a rate more than double its previous peak in 1983.
In the period from 1965 to 2008, that median duration of unemployment had never topped 13 weeks.
The number of people who are working part-time for economic reasons has also shot up to record highs and is currently at about 9 million. The highest point it was at in the last 40 years (and surely much longer) was 7 million.
It is the deepest, in terms of percentage decline in jobs since the Great Depression.
Some states are currently being hit worse than others. Nevada's unemployment rate of 14% is the highest in the country. It is followed by Michigan at 13%, and California and Florida at about 12%. North Dakota with a 4% unemployment rate is best off.
Colorado is right in the middle of the pack with an unemployment rate of about 8.5% but, Colorado is one of about eight states, however, that is very close to the highest unemployment rate that the state has seen since 1976. Unlike states in the Rust Belt and Appalachia, Colorado isn't familiar with this serious an economic downturn.
Denver's housing market, however, is the strongest of the twenty Case-Shiller urban markets other than Dallas (and isn't far behind it) having suffered only a 10.6% decine from the peak. The bottom of the heap Las Vegas real estate market, in contrast, is down 57.6% from the peak. The strong Denver housing market is reflects in its low vacancy rates for rentals. "The small-property vacancy rate in the seven-county metro area dropped to 2.9 percent in the third quarter, the lowest rate in that period since record-keeping began in 2001." This is down from 4.6% a year ago and has been fueled in part by a decline in the average rent to $1,041 from $1,060 a year ago. Douglas County has bucked the trend with an increase in small property vacancy rates from 5.2% to 5.7%.
The only recession in which the workforce was declining for a similar in length of time was the 2001 tech bust. But, that tech bust involved only a 2% decline in employment, making it one of the more mild post-Great Depression downturns, while the Great Recession has involved a 6% decline in jobs. The 2001 tech bust lasted 47 months from it start to the point where the number of jobs in the economy had returned to pre-recession levels.
The Great Recession will almost certainly be longer - it has already lasted 35 months and no one seriously expects that all jobs lost will be replaced at the 5.7% over the next twelve months it needs to be back where it was when the Great Recession. The number of jobs in the economy has not grown at all in the last six months. The fact that job recoveries have been slow in the last two recessions (1990 and 2001) as well as the current recession, which started in 2007, compared to prior post-Great Depression recessions where jobs were lost and then restored much more quickly, suggests that something has changed in the process by which the U.S. economy creates jobs.
Few Commercial Banks Have Failed Given The Depth of the Downturn
Unlike the Great Depression, commercial bank failures, while high, aren't at record highs.
This year there have been 149 FDIC insured bank failures so far, this is more than last year, and there will probably be a few more before the year end. But, recently as 1992, a year when the economy was in far worse shape (GDP fell a quarter as deeply, 1.5% in that recession that began in 1990, and GDP had retuned to where it started 30 months later, while this time around GDP is still down 5.4% after 35 months and has been below the low point of the 1990 recession for 25 months), there were 189 bank failures.
Also, most of the banks that are failing are tiny. The failed banks this time around also make up only a tiny percentage of all FDIC insured banks as a percentage of insured assets, and none are anything close to being total losses.
Bank failures are a lagging indicator. The 1992 bank failure peak was two years after that recession started in 1990. The financial crisis started in 2007, but bank failures didn't start to pile up in atypically high numbers until 2009. But, the number of bank failures in 2011 is unlikely to be a lot higher than it was in 2009 and 2010.
While the FDIC is not obligated to protect depositors with more than the FDIC insurance limit amount in their accounts, I'm not aware of a single instance where a depositor has lost anything in a bank failure. Swift deals to sell bank deposits to other banks have held depositors harmless and made the blow to the FDIC's insurance premium funded reserves modest. Shareholders of failed banks have been wiped out, of course, as have some long term investors, but bank customers (except those awaiting loan approvals that didn't get their loans due to the failure of a bank, most of whom were able to get loans elsewhere with some delay) haven't been hurt.