New York, Sept. 21: The United State’s economy has lost more jobs than it has added since the recovery began over a year ago.
Yes, you read that correctly.
The downturn officially ended, and the recovery officially began, in June 2009, according to an announcement Monday by the official arbiter of economic turning points.
Since that point, total output — the amount of goods and services produced by the United States — has increased, as have many other measures of economic activity.
But nonfarm payrolls are still down 329,000 from their level at the recession’s official end 15 months ago, and the slow growth in recent months means that the unemployed still have a long slog ahead.
“We started from a deep hole,” said Mr James Poterba, an economics professor at MIT and a member of the National Bureau of Economic Research’s Business Cycle Dating Committee, which declared the recession’s end. “And clearly the bounce-back has not been immediate after hitting this trough.”
The declaration of the recession’s end confirms what many suspected: The 2007-9 recession was not only the longest post-World War II recession, but also the deepest, in terms of both job losses and at least one measure of output declines.
The announcement also implies that any contraction that might lie ahead would be a separate and distinct recession, and one that the Obama administration could not claim to have inherited. While economists generally say such a double-dip recession seems unlikely, new monthly estimates of gross domestic product, released by two committee members, show that output shrank in May and June, the most recent months for which data are available. Output and other factors would have to shrink for a longer period of time before another contraction might be declared.
Even without a full-blown double dip in the economy, the recovery thus far has been so anaemic that the job picture seems likely to stagnate, and perhaps even get worse, in the near future.
Many forecasters estimate that output needs to grow over the long run by about 2.5 per cent to keep the unemployment rate, now at 9.6 per cent, constant.
The economy grew at an annual rate of just 1.6 per cent in the second quarter of this year, and private forecasts indicate growth will not be much better in the third quarter.
“The amount of unemployment we’ve already got and the slowness of recovery lead to predictions that we could have 9-plus per cent unemployment even through the next presidential election,” said Mr Robert J. Gordon, an economics professor at Northwestern University and a committee member. “What’s really unique about this recession is the amount of unemployment in combination with the slowness of the recovery,” he said. “That’s just not happened before. We had a sharp recession followed by a sharp recovery in the 1980s. And in 1991 and 2001 we had slow recoveries, but those recessions were shallow recessions, so the slowness didn’t matter much.” All three of these most recent recoveries have been known as jobless recoveries, as employment growth has significantly lagged output growth.