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Tuesday, January 12, 2016

Great Depression vs. Great Recession: Unemployment - Updated December 2015

The reported unemployment rate during the Great Depression was significantly higher than the reported unemployment rates of the Great Recession.

But are the two rates comparable? Before 1938, children were a significant part of the labor force.  In 1900, children younger than sixteen made up as much as eighteen percent of the labor force.  It was only when the Fair Labor Standards Act of 1938 became law that children younger than sixteen were barred from working in manufacturing and mining but not agriculture.

To make the numbers more comparable, it is better to get the ratio of Employment to the Total Population (which includes children). When we do this, the two measures are not so far apart.  In 1929, the year "0" for the Great Depression, 54.41% of the total population was employed.  By 1933, year "4", only 41.97% of the population was employed. But the rise in employment was dramatic.  Four years later, 47.63% of the population was employed, almost six percentage points higher. The employment momentum only stalled when the tax hikes of 1937 induced another recession in 1938 and new child labor laws barred children from the labor force.  If the momentum had continued, the employment ratio would have recovered in less than five years.

In 2007, the year "0" of the Great Recession, 48.38% of the population was employed.   Four years later, only 44.82% of the population was employed, a drop of less than 4 percentage points.  By December 2015 or four years after the Great Recession bottomed out, only 46.45% of the population is employed, an increase of only 1.63% percentage points.  The growth rate of employment was less than a third that of the Great Depression.  At this rate, it will take five more years before employment recovers to that of Year "0".

Great Depression vs. Great Recession

Source:,, Reinhart and Rogoff, "This Time is Different"

Friday, January 8, 2016

Singapore, Malaysia, and Thailand Post Flat to Declining Housing Prices, Can the Philippines and Indonesia be Not Far Behind? - 2nd Qtr 2015

Almost all countries discussed in this blog post, with the exception of Thailand, have been experiencing rapid growth in home prices that have outstripped inflation by a wide margin.  The gap between home prices and their inflation adjusted levels are at the widest ever, particularly in Singapore, Hong Kong, and the Philippines.


Singapore's home prices have now been declining for seven straight quarters, which, according to Bloomberg, is the longest losing streak in five years.  Home prices are still  75.50% above their year end 2004 levels. Overall prices levels, as measured by inflation have just increased by 30.09% since year end 2004.  In other words, for the past ten years, Singaporean home prices have outpaced inflation by more than 45 percentage points.


Neighboring Malaysia's House Price Index actually topped out at 182.14 in the fourth quarter of 2014 and has declined to 180.24 as of the second quarter of 2015.  Home prices are 80.24% above their year end 2004 levels.  General price levels are around 50 percentage points lower, at 31.06% above their year end 2004 levels.


In Thailand, which has been experiencing political turmoil for some time, home prices have remained essentially flat since the end of 2004. Home Prices ended 2013 with the index at 100.54, just 0.54% higher than the end of 2004, but showing a substantial recovery since the recent low of 74.08 posted in the third quarter of 2009. In the second quarter of 2015, home prices have rebounded to 105.43, or 5.43% higher than its year-end 2004 levels, way below its expected inflation adjusted levels. General Price levels are 34.50% above their year end 2004 levels.


Meanwhile in Indonesia, home prices have showed no signs of slowing down their upward trajectory.  In fact, prices seem to have gone parabolic, climbing 4.63% in the last quarter of 2013, from a base of 121.49 as of the third quarter of 2013 to 127.11 as of year end 2013.  In the second quarter of 2015, home prices have climbed an additional 9.75% to reach 139.51.  Since the first quarter of 2007, home prices have risen 39.51%. Indonesian Home Prices, like every other country in this list with the exception of Thailand, have climbed faster inflation since 2007.

Hong Kong

Hong Kong real estate prices have leaped by 234.46% in a little over 10 years to reach a staggering 345.03 as of the second quarter of 2015 from a base of 100 since year-end 2004. General inflation levels have just climbed 37.87% during this same period.  In other words, Hong Kong home prices have outpaced inflation by an astounding 207.16% during this period, the highest rate of appreciation in the countries covered in this post.


Philippine house price index stands at 217.20 at the end of the second quarter 2015 or over 117.20% above their year-end 2004 levels.  Philippine home prices, with the exception of Hong Kong, have posted the largest 10 year gains among all the countries considered in this blog post.  Like Singapore and Malaysia, Philippine home prices have outstripped inflation by around fifty-seven percentage points.  Like Indonesia and Hong Kong, Philippine home prices have so far no signs of slowing down their upward trajectory for the foreseeable future.   The question is, is this momentum sustainable?  Or will the Philippines and Indonesia follow its ASEAN neighbors, Singapore, Malaysia, and Thailand, in exhibiting plateauing or declining house prices?  That remains to be seen.

Source: Global Property Guide, Trading Economics