Where's the Recovery?
May 6, 2011
If you have been pinning your job-search hopes on the conventional wisdom that employment gains follow an economic recovery, you have a problem right now. The so-called Great Recession has been over for almost two years, but unemployment remains about where it was before the National Bureau of Economic Research (NBER) declared that the recovery had begun, says Tim Cavanaugh, a senior editor at Reason Magazine.
- In June 2009, the month NBER has pinpointed as the end of the recession, the Bureau of Labor Statistics' unemployment rate stood at 9.5 percent; in early 2011, the unemployment rate was 9 percent.
- To put this feeble recovery into perspective: Just eight months after the job-loss peak in the 1948 recession, which saw unemployment increase by 5.2 percentage points, all of those jobs had been replaced.
- Less than a year after the trough of the 1958 recession, the economy had reversed an unemployment spike of more than four percentage points.
- In 1981-1982, job growth more than erased a 3.1 percentage point increase in unemployment within 11 months, leaving the rate lower than it was before the recession.
Economists have rolled out an alphabet soup of justifications and neologisms to explain all this: the "w-shaped" or "l-shaped" recession, the "double dip," the "jobless" or "job-loss" recovery, and so on. But there are really only two possible explanations: Either the recovery isn't happening, or there's something wrong with our assumptions about the economy, says Cavanaugh.
Source: Tim Cavanaugh, "The All-New Failure of the New Economics," Reason Magazine, May 2011.
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