GDP and Unemployment
Current and previous recessions compared
Gross Domestic Product
Recessions involve falls in Gross Domestic Product (GDP) and are normally characterised by rising unemployment. This analysis compares the paths of GDP and unemployment in the 2008-09 recession with those experienced in the previous two recessions. The chart above shows the small contraction of 0.1 per cent in quarter two of 2008.
In the third quarter of 2009, GDP fell by 0.4 per cent on the quarter. This followed a decline of 0.6 per cent between the first and second quarters of 2009. Quarter three of 2009 was the sixth consecutive quarter of contraction.
In the latest period GDP was 5.9 percentage points below its pre-recession level. This compares to equivalent figures of 2.4 percentage points for the same period in the 1990s recession and 4.5 percentage points in the 1980s recession. In the previous recessions presented, GDP returned to positive quarterly growth in the sixth quarter following the onset of recession. By contrast in the sixth quarter of the current recession GDP has continued to fall, although the rate of decline has decreased.
Unemployment
In quarter three of 2009, the unemployment rate stood at 7.8 per cent. There was an increase of 0.1 percentage points on the previous quarter. This is not identifiable in the figure above due to rounding.
The unemployment rate has remained lower than it was in the first six quarters of the 1980s and 1990s recessions. The unemployment rate was 0.1 percentage points higher at the start of the 1980s recession than at the start of this recession. The quarterly increases in the unemployment rate in the 1980s recession were higher than in this recession, so the difference between the unemployment rate in the sixth quarter of this recession compared with the 1980s recession was 1.7 percentage points. Quarterly changes in the unemployment rate in the 1990s recession were similar to those in the current recession, although the rate in the 1990s was around two percentage points higher.
Sources: Gross Domestic Product (ABMI): chained volume measures, seasonally adjusted, Office for National Statistics. Unemployment rate (MGSX): Labour Force Survey, all those aged 16 and over, seasonally adjusted, Office for National Statistics.
Notes: The first quarters of recession used for this analysis are Q1 1980 for 1980-81 recession, Q3 1990 for 1990-91 recession and Q2 2008 for 2008-09 recession. GDP estimates for quarter 3 2009 are based on Quarterly National Accounts figures published on 23 October 2009. Estimates of unemployment rate for quarter 3 (July-September) 2009 were published on 11 November 2009.
printer-friendly
GDP Growth