Saturday, October 6, 2012

Employment Gains in Perspective

Why do we say that the current recovery is sluggish or anemic? Let me present some data that show the reason why. In the following graphic, I present average monthly job gains for two periods. The first, for 1992 through 2000 followed the 1990-1991 recession. In 1991, the economy lost 61,333 jobs per month on average. That period was followed by the 2001 recession, which lasted from March through November of that year. In 2001, the economy lost 145,500 jobs per months on average. The second period of recovery, 2010 through the present, followed the Great Recession (December 2007 through June 2009). In 2009, the economy lost 353,500 jobs per month on average. In other words, I am showing job gains in two growing periods. Here is the chart:

Note here that average monthly job growth began weakly in 1992, coming out of the 1990-1991 recession; the economy then took off but turned weak again ahead of the 2001 recession. In 2010, coming out of the Great Recession, the economy showed a recovery similar to that of 1992, but has since performed much less energetically than the earlier recovery. Indeed, the economy recovered all of the jobs lost in the 1990-1991 period (763,000 jobs) in 1992 already (an annual gain of 1.104 million).  Not so our current recovery. In the Great Recession the economy lost 8.663 million jobs in 2008-2009, of which the 1.067 million annual gain in 2010 was just 12 percent. Our friends in red suspenders, the Lords of the Financial Universe, made a gigantic mess. They broke the furniture, shattered all the china, and cut the mattresses apart in their drunken exuberance.

We’re still just sweeping up the shards and hauling garbage. That’ll take a while—especially in view of the fact that the culprits haven’t really been brought to justice yet and probably never will be. The much hyped drop in unemployment rate is largely illusion. That number can go down if appropriate numbers of disappointed workers just stop looking for work.

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