Below is a chart which looks at employment experience over previous recessions and adds in employment data taken from Feinstein’s National Income Expenditure and Output of the UK, 1885-1965. It is annual data only so shows a smoother pattern than the more recent quarterly data, but raises the possibility that the current recession might not be too different.
What drove employment to reach new heights in four years? As much as anything, new technologies, new consumer products and new manufacturing. This in turn produced the incomes which enabled people in work to buy new houses at prices they could afford. This is the trick we need now.


It is interesting to contrast this with measures of output, also including the historical estimates produced by Fenstein’s magisterial work.

The Great Depression took a while to get going – without that slow start, the pattern would look very similar to all the other major downturns post-war. Even so, it does seem to take longer to turn round and to be more similar to the current position. A moment’s thought experiment suggests that things are not nearly so bad as in that period. So perhaps it is right to continue to be suspicious of output estimates.