05 April 2010

Beating Unemployment A Moving Target

[T]he Labor Department reported that the economy created 162,000 jobs in March but the unemployment rate remained fixed at 9.7 percent. This is hardly a paradox. The labor force is growing at the rate of about 125,000 workers a month.

From here.

The economy has lost 6% of its jobs in the last two and a half years, and may need at least as long to recover the jobs it lost, on top of the 125,000 new jobs that must be created each month simply to keep the unemployment rate the same, if we have really hit bottom in jobs and past job recoveries are any guide.

To recover that fast, the economy will need to great something on the order of 250,000-400,000 jobs every month in that time period. Conventional wisdom, as expressed by the federal government unemployment forcasts and economics bloggers is that job recovery will be slower, and that returning to the jobs status quo will take more than a couple of years.

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