Earlier we identified two key differences between the US and Japan:
- The US demographic situation is better in the US.
- The human toll of the economic downtimes — via unemployment — is worse in the US.
Depending on how you look at things, the latter is either a feature or a curse of the US economy.
It’s a curse, because it’s a lot easier to slip through the cracks and lose your income. It’s a feature because the economy is dynamic and flexible.
Basically, for the US worker, the economy is volatile in a way that’s not seen in other big, rich, developed countries.
The chart below shows the year-over-year chance in the size of the unemployed population in the US, Japan, Germany, and France. The fat red line is the US. Japan is blue. Germany is green and France is orange.
Now, back in the 70s and 80s, there were some huge swings in the size of the German unemployed population, but since then, all those other countries have done a “good” job of moderating the impact of recessions and so on. Not so in the US. Here we still see substantial upward swings int he size of the unemployed population during recessions, even while other countries only see marginal change.