Saturday, December 8, 2012

The Weak Jobs Report and Economic Recovery Compared to Past Recessions and Recoveries

The November unemployment rate was reported at 7.7% and the broader U-6 rate was still a really high 14.4%.

More people are dropping out of the work force than are finding jobs, and the labor force participation rate at 63.6% has hit a new low in this economic cycle compared to the 65.7% when the current economic "recovery" began in 2009.

Since a picture is worth at least 1,000 words, let's look at the following chart in Comparing Recessions and Recoveries:

For the 26th straight month, the country added jobs: 146,000 nonfarm payroll jobs in November, to be more precise.
But employment still has a long way to go before returning to its prerecession level.

The chart above shows economywide job changes in this last recession and recovery compared with other recent ones; the black line represents the current cycle. Since the downturn began in December 2007, the economy has had a net decline of about 3 percent in its nonfarm payroll jobs. And that does not even account for the fact that the working-age population has continued to grow, meaning that if the economy were healthy we should have more jobs today than we had before the recession.

Getting the economy to 5 percent unemployment within two years — a return to the rate that prevailed when the recession began — would require job growth of closer to 270,000 a month.

There are now 12 million workers looking for work who cannot find it. The tally of those who are “underemployed” — that is, adding in those workers who are part time but want to be employed full time, and workers who want to work but are not looking — is an even larger 22.7 million."

Summing Up

Things have been tough, are tough and will remain tough in the U.S. economy.

Of course, that means the same holds true for jobs, incomes, deficits and the nation's debt levels.

And that's regardless of all the steps being taken by government officials to "save the middle class."

Here's my take. We could sure use a little less "help" from our government friends.

They've done more than enough already.

Thanks. Bob.


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