Reply #38: well, to be fair

[bigtree]

I can't possibly represent all of the worst characterizations of 'cueing doom/gloomers' to respond to this report. A few actually did respond. Others, like you, have presented valid arguments about structural difficulties hindering economic progress and the real-life consequences of those inequities.

The economists cited in the report I posted seem to feel that this holds well for an expansion of these apparent gains. I'm heartened by the reports and their optimism; as well as by the uptick in consumer confidence. I think we're going to see more job recovery. Who really knows what actions or events will occur to sustain or undo that prospect? There is a recovery of some kind underway right now though . . .


here's an interesting analysis from today about our 'jobless recovery':

Employment Situation: Current Recovery vs. Other Jobless Recoveries

Sun, Apr 11 2010, 22:12 GMT
by Northern Trust Economic Research Department

The economic recoveries following the 1990-91 and 2001 recessions have been coined as "jobless recoveries" and it is widely predicted that the current recovery will be "Jobless Recovery 3.0." The National Bureau of Economic Research (NBER), the official agency that dates business cycles, is yet to announce that there is an economic recovery underway. In December 2008, the NBER identified that the peak of the previous business cycle occurred in December 2007. The NBER is most likely to identify June 2009/July 2009 as the trough of the current business cycle. In other words, the recession which commenced in December 2007 ended in June 2009/July 2009. Real gross domestic production grew in the third and fourth quarters of 2009, after posting declines in three of the four quarters of 2008 and the first two quarters of 2009. Assuming the recovery began in the third quarter of 2009, the U.S. economy is now in the fourth quarter of the recovery phase. It is a good time to check how the current employment data compare with the last two jobless recoveries.

Payroll employment during the three quarters of the current recovery matches very closely with the recoveries following the 1990-91 and 2001 recessions. Chart 1 is an index chart where the level of payroll employment in the trough is set to 100 and corresponding index levels are computed. An index of 102 would imply that payroll employment has risen 2% from the trough quarter, while an index level of 98 would mean payrolls have declined 2.0%. From Chart 1, it appears that payroll employment is still below the quarterly average posted in the third quarter of 2009. For purposes of comparison, the level of payroll employment in the first quarter of 2010 matches the level seen at a similar stage in 1991 and 2001 recoveries (see chart 1). Hiring in the period following the 1990-91 recession was markedly higher, particularly in the later stages of business expansion, compared with the 2001 expansion (see chart 1) although both were jobless recoveries. Payroll employment surpassed the level registered in the trough after six quarters in the1991 expansion whereas it took 10 quarters for payroll employment to reach the level posted in the trough of the 2001 expansion. In the first quarter of 2010 payrolls remain below the level seen in the third quarter of 2009, as mentioned earlier.



To put matters in perspective, the 1961 and 1982 expansions were marked with strong job growth. Payroll employment had risen 3.1% from the trough at the end of 4 quarters of economic expansion in these two business cycles (see chart 2). By contrast, payroll employment in the 1991 and 2001 cycles was below the level of the trough after four quarters of economic growth. What do we see in the months ahead? Payroll employment has risen in three out of the last six months, with an increase of 162,000 jobs in March. Although it is too soon to identify whether it will mimic the path taken after the 1991 or the 2001 recessions, the size of structural unemployment in the current recession supports forecasts of a lengthy period of tepid gains in payrolls.



The unemployment rate is a lagging economic indicator and it peaks at the end of a recession or several months after a recession. As shown in chart 3, the unemployment rate peaked several months after the recession in the 1991 and 2001 business cycles which is different from other post-war business cycles when the jobless rate has peaked at the tail end of a recession.



The peaks of the unemployment rate in 1973 and 1982 recessions are closer to the current recession. However, the recoveries following these recessions were not "jobless recoveries" as there was a relatively quick drop in the unemployment rate when the economy turned around. Narrowing the focus on only the last three recessions, the unemployment rate has risen far more rapidly in the current cycle compared with the 1990-91 and 2001 recessions (see chart 4). Chart 4 plots the unemployment rate of the last three recessions such that comparisons are possible with the peak of a business cycle (or the beginning of a recession) as the reference quarter, denoted as "0" on the horizontal axis. The unemployment rate (quarterly average) peaked after seven quarters following the start of the recession in the 1990-91 cycle, while it took nine quarters in the 2001 recession. Putting it differently, the unemployment rate was advancing even after the recovery was underway in the both of these business cycles. This time around, the unemployment rate has peaked in the fourth quarter of 2009 at 10%. Therefore, the unemployment rate has peaked after nearly two years in each of the three jobless recoveries. A caveat is in order here, it is not determined yet, if the 10% reading of the jobless rate in the fourth quarter of 2009 is the current cycle high. Business cycles are unequal and have different attributes that stand out. The current recession is atypical in terms of the duration of the decline in economic activity and the depth. The extent of the structural unemployment in the current downswing of economic activity is likely to play a major role in determining the nature of hiring in the months ahead.