September 28, 2010
The current downturn had led to the worst period of sustained unemployment since the Great Depression. This suffering is especially tragic because, like the Great Depression, it is entirely the result of misguided economic policy.
Unemployment corresponds to lost production of goods and services. Construction workers could have been providing safe and energy efficient housing to people who lack adequate shelter, but instead they were left sitting idle. Manufacturing workers, who could have been producing more fuel-efficient cars and appliances, are instead getting unemployment checks. Health care workers who could have been ensuring that people received adequate care and teachers who could have been in classrooms, helping educate our children, are instead spending their time looking for work.
This is an incredible loss not only for these workers who must struggle to make ends meet, but also for our economy and society. The CEPR Recession Waste Clock allows people to see the value of the goods and services that we have lost in this downturn. It measures the gap between potential GDP (as calculated by the Congressional Budget Office) and actual GDP.
Given the current unemployment rate of 9.6 percent, the amount of lost GDP as measured by this gap increases at the rate of $2.873 billion per day. This comes to $120 million an hour, $2 million a minute or $33 thousand a second.
You can also see the amount of lost output measured in units of houses, college educations, or personal mp3 players.
The calculation of lost output is based on the gap between potential GDP as estimated by the Congressional Budget Office and actual GDP. The projection going forward assumes the same quarterly output gap as the last quarter for which data are available.