It’s Not a Jobless Recovery

It's Just Not a Recovery. . . Yet

Last Friday's disappointing jobs report elicited some strange responses on financial TV. The idea that the recession is over is one I find hard to take seriously. Yet, some commentators have bought into it so completely that the jobs report caused them to start talking about a "jobless recovery." Others hinted at the same thing by emphasizing that employment and unemployment are lagging indicators.

Here I go stating the obvious again: The recovery is not over. We don't have a jobless recovery; we just don't have a recovery yet.

A jobless recovery is one where output and income are growing, but employment is not. I expect that once we do get a recovery in output we will have a jobless recovery for a while. That was the case in the last two recessions. But, at this point, I see no evidence that output is growing. The first quarter real GDP number was MINUS 5.5 percent. The last Industrial Production number was 1.1 percent below a year ago. And job losses of 467,000 in June, or even the lower 322,000 in May, are just too large to be compatible with an economic recovery.

Our Last Jobless Recovery

The recovery from the 2001 recession began surprisingly early, in November 2001, only two months after 9/11. In a NYC speech in early 2002, I celebrated the early recovery with a sophisticated limerick titled "Bad Timing."

Bad Timing

Their once was an economy on the ropes
That kept dashing our recovery hopes.
When we made the concession
To call it a recession,
It turned up and we felt like dopes.

But after the first few months of the recovery we had an extended period during which employment losses resumed, even while output was expanding based on productivity gains. Speaking again in NYC late in 2003, I believe it was, I followed up with the following limerick:

Close, but No Cigar

The recovery is now 2 years old
And maybe it was oversold.
    Now we've made the discovery
    That it's a jobless recovery.
It wins the silver, but not the gold.

These limericks and other foolishness may be found on my web site in the section, "Rhymes with No Reason." Go to http://www.bobmcteer.com/.