An Economic Recovery That's Moving Sideways

by: Mark Thoma

We need to create 100,000 to 125,000 jobs per month just to keep up with the growth in population. In order to reabsorb the millions of workers who have lost jobs during the recession back into the labor force, we need to create several hundred thousand jobs per month, and even at that rate it would take years for employment to fully recover.

Unfortunately, according to the latest employment report from the BLS, the economy only created 80,000 jobs in October:

Nonfarm payroll employment continued to trend up in October (+80,000), and the unemployment rate was little changed at 9.0%... Employment in the private sector rose, with modest job growth continuing in professional and businesses services, leisure and hospitality, health care, and mining. Government employment continued to trend down.

The average over the last three months was 114,000. That's enough to keep up with population growth, but no more. Unemployment did fall slightly, from 9.1% to 9.0%, and the the employment to population ratio also increased by 0.1 pp to 58.4%. Those numbers are moving in the right direction, but the rate of change is much slower than needed. Again, at this rate it will be years before we get back to full employment. And the fall in government employment, something under our control, at a time when we need to be creating jobs doesn't help at all.

The big picture from this report is that we are not experiencing the kind of growth typical in recoveries -- it is much slower than the recovery from previous recessions. We are moving sideways -- we aren't losing ground but we aren't gaining ground either, at least not at a satisfactory rate -- and looking forward it's hard to see anything that will change the painfully slow recovery the economy is currently experiencing.