Jobs recovery is stronger than pass recessions
Original post made by Chet on Sep 2, 2010
A jobless recovery? Hardly.
By historical standards, the labor market is recovering nicely -- job growth has started earlier than in past recessions.
But the unemployment problem isn't going away. An especially tough recession has raised the bar on the amount of job growth needed to recover, magnifying the pain of the struggling labor market.
The unemployment rate hit a high-water mark of 10.1% in October 2009 and has since fallen to 9.5%. Payrolls began growing in November and, excluding the impact of temporary census jobs, the economy has added jobs every month since January.
That's a much quicker peak than previous job market recoveries.
After the 1990-91 recession ended, the economy lost nearly 300,000 additional jobs in the 11 months that followed. And the 2001 recession was followed by a so-called jobless recovery that lasted for nearly two more years.
"Sustained, positive job formation began earlier in this recovery than in the prior two recoveries," said Lakshman Achuthan, managing director of Economic Cycle Research Institute.
But today's economy is different. The problem is that the damage done during the Great Recession was so severe, it will take a lot more growth than normal to dig the job market out of its hole.
There were 8.4 million jobs lost in 2008 and 2009 -- roughly 7% of all jobs at the start of the recession. That compares to a loss of 3.1% of all jobs during the 2001 recession and the jobless recovery that followed, and only 1.9% of jobs lost during and after the 1990-91 recession.
And there are concerns about the fact that job growth has slowed dramatically from the spring of this year when employers were adding about 200,000 workers a month to payrolls. Even at that pace of hiring, it would take more than three years to get jobs back to pre-recession levels.
Right now, it's not even close. Overall payrolls, excluding the temporary boost from census jobs, have increased by an average of just 12,000 jobs a month over the last three months.
And as the government prepares to release its August jobs report on Friday, economists, employers and job seekers are all watching with bated breath.
Brusca said given the fact that job losses took place throughout 2008 and 2009, it's still too soon to conclude whether the recovery is going to come up short. He's still hoping growth picks up in the fall as businesses start to gear up for the holiday shopping period.
"The summer is not the time you want to be taking the temperature of the economy," he said. "Come September and October, if the data is still weak, I'll sing a different song."
But the weaker numbers of late have sparked fears that the nascent jobs recovery could stall out and the economy could topple into a double-dip recession.
Heidi Shierholz, labor economist for the Economic Policy Institute, thinks another shot of stimulus spending by the federal government is called for in order to avoid more job losses.
"We owe the growth we have seen to the measures that the Fed and Congress took in early 2009," she said. "It's great to put the brakes on the jobs losses of last year, but we need to do more."
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