Saturday, November 26, 2011

Where's The Recovery?

There has been an abundance of column inches devoted to the weak job recovery following the Great Recession.  Analysts from the left and right have offered opinions about why employment didn’t spring back after the official end of the downturn in July of 2009.   
But what many have missed is that this phenomenon isn’t new.  In the three most recent economic downturns the US job market has been noticeably less fluid than in earlier times.  Unemployment – after the recessions of 1990, 2001, and 2007 – was slow to rebound, and in all three cases continued to increase even after the end of the economic contraction. 
This is in stark contrast to our earlier postwar recessions as illustrated clearly in the graph at the top.  In those instances joblessness fell as soon as the economy began to grow. 
Are these trends just a coincidence?   Or has something structural changed? 
The good news is that, although a jobs recovery didn't shift into gear immediately after 1990 and 2001, unemployment did eventually follow the typical pattern of a post-recession precipitous drop. 
If that’s an indication of our current situation then I’m hopeful that the talk of a jobless recovery is misguided. 
Nevertheless it’s an interesting trend that likely has meaning.  I’ll look into it further and write again when I learn more.  

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