Although the economy appears to be gaining some traction the labor market remains extraordinarily weak. In a recent research report the Cleveland Fed put this weakness into perspective (Cleveland Fed):
“The effects of the recent recession have been especially bad for the labor market. With the current estimate of real GDP only 0.6 percent lower than its prerecession peak, most of the loss in real GDP over the course of the recession has been recovered, but payroll employment is still about 5.4 percent less than its pre-recession peak. The U.S. economy has been generating only 86,000 new nonfarm payroll jobs a month on average since the beginning of 2010. Though blurred somewhat by the hiring of temporary Census workers, total private nonfarm payrolls gives a similar picture; firms on average created 106,000 jobs in the first eleven months of 2010.”
“The recovery in payroll employment so far is relatively weak by historical standards. In previous recessionary episodes, it took almost 23 months for payroll employment to return to its pre-recession peak. The current recovery presents a stark contrast; even after 35 months, we are still 5.4 percent below the previous peak. The slow recovery might be due to the unusually long duration of the last recession. On average, recessions last about 10 months, but the last one lasted 18 months.”
“However, the unusually long duration doesn’t seem to explain the sluggish recovery in payroll employment entirely. One problem is the timing of the recovery. In all previous recessionary episodes, the end of the decline in payrolls coincided with the official end of the recession on average, about 10 months. After the last recession, however, payroll employment reached its trough in 24 months, half a year after the official end of the recession.”
This recession is starting to give new meaning to the term “jobless recovery”….