For many people this economy will continue to feel like it’s in a recession until the labor market begins to recover substantially. In an effort to visualize the extent of the destruction caused by the Great Recession the NY Times put together the following graphic showing just how long the road back to full employment is:
“9.4 million jobs would need to be added immediately to reduce the jobless rate to below 6 percent, considered by some economists to be full employment. But the shortfall will grow because roughly 125,000 new jobs a month are needed to keep up with population growth.”
Unfortunately, U.S. corporations are learning to do more with less. Fat margins and overseas growth have provided companies with sufficient bottom line growth. Domestic aggregate demand has not picked up substantially, however, many industries don’t seem to be all that concerned about it as profits hit record highs. Without a surge in domestic aggregate demand (something that appears unlikely given the unusual debt dynamics at work) we are unlikely to see anything approaching full employment until 2016 or beyond….