Figures released by the BLS recently show that unemployment stayed flat at 9.7% in February 2010. Is this really good news? At a philosophical level, happiness emanating from employment is largely binary in nature. The unemployed are gloomy while the employed are relieved, if not exactly happy.
Cut back to reality. Unemployment seems to have plateaued out. So is the worst behind us and can we look forward to a long period of stolid growth at best and flat movement at worst?
Calculated Risk has a depressing but useful chart.
We are still deep in the abyss. Most of the past job recessions barring the recent 2000s recession took about 2 years, on average, to recover back to square 1. Somewhat ominously, the length of recovery has extended significantly in each of the past recessions (2001 > 1990 > 1981). A healthy dose of good fortune could enable the current job recession to recover back to square 1 in another 2 years. I would put that as a best case. CEPR had this to say on unemployment:
…however, there is absolutely no reason to believe that any substantial uptick in employment is imminent.
Continuing the theme echoed in yesterday’s post, I think consumer spending will take quite some time to recover to a level where it can propel the economy. The longer term solution is to discover a new engine for future growth.
Will/Can Exports please stand up?