Snapshot for August 6, 2003.
Worst recovery on record in terms of job growth
According to the National Bureau of Economic Research, the recession ended in November 2001, as a number of indicators suggested that the economy began expanding in that month. Employment, however, was not one of those indicators. Since the recession ended, the number of jobs has declined by one million overall and by 1.2 million in the private sector. (Because government employment is less sensitive to the business cycle, private sector job growth provides a more direct measure of the impact of economic conditions on the job market.)
The figure below reveals that this is the first recovery in the post-WWII period in which the number of jobs in the private sector has actually fallen 20 months into the expansion. Payrolls are down 1.1% since the start of the recovery 20 months ago, compared to growth rates as high as 17% in the mid-1940s. In the recovery period of the early 1990s, which was also characterized by initially weak employment growth, payrolls increased by 0.3%. The employment growth rate of all prior recoveries has averaged 6.6% in the first 20 months of post-war expansion.
The current problem is that, although the economy is expanding, growth has been too slow to generate jobs. Given trend increases in productivity and the labor force, unemployment is unlikely to fall until the economy begins expanding at annual rates of roughly 3.5%. (on average, GDP has grown 2.6% per year since the quarter in which the current recession ended). In order to generate enough jobs to significantly lower the unemployment rate, the economy will need to grow even faster.
This week’s snapshot was written by Jared Bernstein with research assistance by Sujan Vasavada.
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