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Jobs recovery is stronger than pass recessions

Original post made by Chet, San Ramon, on Sep 2, 2010

Chris Isidore, senior writer, On Thursday September 2, 2010, 6:26 am EDT

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."

Comments (4)

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Posted by radical
a resident of Another Pleasanton neighborhood
on Sep 2, 2010 at 9:26 am

we all know chet can cut and paste, and now i can too!

on the economy as a whole, from the same ECRI that has so much good to say about jobs
Web Link

Excerpts from ECRI professional reports:

January 2010 “The U.S. Long Leading Index (USLLI) growth rate, which had soared to a 63-year high in September, is now in a cyclical downturn… This means that U.S. economic growth is likely to start easing by mid-year…In this context, it is also notable that cyclical downturns in stock prices (a short leading indicator) have almost always followed post-recession cyclical downturns in USLLI growth…In sum, the U.S. economy is moving off the sweet spot and entering a higher-risk environment.”

February 2010 ECRI goes on public record about implications of upcoming slowdown (CNBC clip above).

March 2010 “With stronger U.S. economic data discrediting the doubters, double-dip talk has dried up. Not surprisingly, most economists are marking up their growth projections for 2010 and beyond. As usual, such prognosticators are focused largely on coincident economic indicators, which they then extrapolate. This is why there was so much fear of depression last spring, when we forecast a growth rate cycle upturn, based on our objective leading indexes.

Having correctly predicted an upturn in economic growth in the face of widespread skepticism a year ago, those leading indexes are now anticipating a near-term cyclical peak in U.S. economic growth. Specifically, growth in the U.S. Long Leading Index (USLLI) has declined for five straight months to a ten-month low… The directional unanimity among our sector-specific leading indexes is striking. Just as compelling are the successive downturns in USLLI growth, WLI growth and USSLI growth, which are providing sequential signals of an upcoming growth rate cycle downturn for the overall economy – precisely as expected… (Thus), even as people are starting to believe that the perfect storm has ended, clouds are gathering on the horizon.”

April 2010 “There is no doubt that USLLI growth is in a post-recession cyclical downturn… (O)ur forecast of a growth rate cycle downturn by mid-year remains fully intact. With the markets growing increasingly confident about a sustained acceleration in U.S. economic growth in the coming months, this highlights a potential divergence between ECRI’s outlook and growing market optimism.”

May 2010 “The risk of a cyclical downturn in stock prices has risen significantly. Moreover, we are approaching the most dangerous period of the business cycle to employ a buy-on-dips strate

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Posted by radical
a resident of Another Pleasanton neighborhood
on Sep 2, 2010 at 9:41 am

and we all know that the U1 unemployment figure doesn't tell even half the story, the 99'ers, the U5 and U6 numbers that tell how many are unemployed and not even looking for work,

worse for many people with families are the UNDERemployed -- everyone knows someone who got laid off and is now working, but making 50-75% of their previous salary

as for this key phrase from chets OP
"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"

Web Link

The Census Bureau contributed 66,000 temporary jobs last month.
Yet, in a sign that many people will struggle to find a job even as the economy improves, the number of people who have been out of work for more than six months hit 6.7 million, nearly 46 percent of the unemployed. “

Web Link

the U.S. economy added an average of nearly 200,000 jobs a month in the January-May period, a positive sign for the labor market as it recovers from the worst recession since the 1930s.
However, the May figure was boosted by the hiring of 411,000 temporary workers for the census. Only 41,000 private-sector jobs were added.

there is ample evidence that census hiring skewed the national numbers in a significant way -- Numerous temp workers reported that they were laid off and rehired by the census over and over

oh yeah, btw, in July we started losing jobs again...

Like this comment
Posted by Mike
a resident of Del Prado
on Sep 3, 2010 at 12:38 am

What flavored Kool Aid are you drinking Chet, or shall I say.....Joe Biden?

Like this comment
Posted by radical
a resident of Another Pleasanton neighborhood
on Sep 3, 2010 at 7:57 am

chet - you are not helping your "fine congressman" Jerry McNUMMI, bad timing on posting the cheery jobs story

U.S. Economy Lost 54,000 Jobs in August; Unemployment Rate Rises to 9.6%
Web Link

'Recovery Summer' Ends With Economic Pothole

Whatever happened to recovery summer?

This was supposed to be the season the economy heated up, thanks to a wave of public works projects, funded by the government's stimulus program. But summer is coming to an end, and the recovery has not taken root. Forecasters are expecting another gloomy employment report on Friday.
Web Link

for once it is not 'unexpected!?!'

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