Employment in the United States fell by a lot during the Great Recession from December 2007 to June 2009. The unemployment rate grew correspondingly from a low of 4.4% in May 2007 to a peak of 10.2% in 2009, and the underemployed grew even faster. That was bad enough, but the growth in employment and decline in unemployment since the trough of the recession has been quite slow. Forecasters got a shock on Friday with the release of preliminary data that indicated the unemployment rate rose a little from 9.6% to 9.8% in November rather than remaining stable or even falling a little. Although data for one month alone do not mean much because of large measurement errors, the average growth in employment over the past three months has been slow, and the unemployment rate has hardly budged. Even more disturbing is that the fraction of the unemployed who have been out of work for longer than six months has remained at a very high level of a little over 40%, up from the much lower level of about 15% prior to the recession.
The slow recovery is disturbing because speedy recoveries typically follow severe recessions. For example, the sharp contraction of the American economy between 1981-’82 produced an unemployment rate of 10.8% in December of ’82, but that was followed by a steady fall in unemployment to a rate of only 7.4 in November 1984. It has been one and one half years since the NBER determined that the Great Recession had ended, but unemployment has only fallen by about ½ of a percentage point, and the growth in employment has been well below the cumulative declines in employment during the recession.
(photo credit: nutmeg66)