By Dave Altig
If you are looking for the full rundown on the September employment report, there is, as usual, plenty of good commentary to be found in the blogosphere. I'll add a couple more graphs to the pile, similar to exercises we have done with gross domestic product in the past.
Payroll employment growth has averaged about 110,000 jobs a month since February 2010, the jobs low point associated with the crisis and recession. This growth level compares, unfavorably, with the 158,000 jobs added per month during the last jobs recovery period from August 2003 (the low point following the 2001 recession) through November 2007 (the month before the recent recession began). One hundred and ten thousand jobs a month compares favorably, however, to the 96,000 job creation pace so far this year.
Are these sorts of differences material? If the economy can find its way to creating jobs at the same rate as the last recovery—which nobody remembers as particularly off-the-chart spectacular—we would be back to the prerecession level of overall employment by spring 2015. If, on the other hand, we can only eke out the sub-100k pace we've seen this year, that date moves out to 2017 [click to enlarge images]:
So we do eventually get there in terms of recovering the jobs lost during the course of the past four years. The same, unfortunately, cannot be said of the unemployment rate. Because the unemployment rate has more moving pieces—like assumptions about labor force participation rates (or how many people jump in and out of looking for jobs)—back-of-the-envelope calculations are a bit more speculative than the simple employment paths in the previous chart. But with a few assumptions, such as the presumptions that the labor force will grow at the same rate as census population projections (for the aficionados, my calculations also assume that the ratio of household employment to establishment employment is equal to its average value since January of this year), the unemployment rates associated with job growth of 158,000, 110,000, and 96,000 per month would look something like this:
These paths are just suggestive, of course, but I think they tell the story. The same jobs recovery rate of the prerecession period would get the unemployment rate down below 7 percent in four years or so. But at the pace we have been going this year, things get worse, not better.