Will the employment recession last another three years?
Filed under: Economy
During the last recession in 2001, there were 22 months between the time that GDP started growing and the time that job growth resumed, according to The Boston Globe. Of course, this current recession has been far worse, so it could be three years before we start to see job creation.
This comes to mind in analyzing today's report that GDP grew 3.5 percent in the third quarter. It certainly helped that durable goods spending spiked 22.3 percent, as the Associated Press reported, with help from the $4,500 cash-for-clunkers rebate program -- and that housing constructing spending soared even higher, up 23 percent, thanks to an $8,000 first-time home purchase tax credit, according to Bloomberg.
But it really is all about jobs. And the news that new jobless claims fell less than expected to 530,000 last week and that 7.2 million are unemployed points to an important problem -- with 70 percent of economic growth coming from consumer spending, it is too early for the private sector to pick up the slack should the 7.9 percent increase in government spending start to fall.
Given that the National Bureau of Economic Research dates the current recession from December 2007 -- the time job growth went negative -- the question of when job growth will resume is of more than academic interest.
People in the U.S. will not believe that the recession has ended until the unemployment rate starts dropping fast from 10 percent back down to four.
Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter.
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Reader Comments (Page 1 of 6)
10-29-2009 @ 1:59PM
TJ said...
When they say recessions are over, they're talking about the financial community. Everyday, things get worst and worst for the working man on the street. We're just fly over county to them. They don't know we exist except election time and then, they say we're too stupid to know what's good for us. And they are absolutely right. We keep sending them back to Washington every year. A sleep has come over the America People. There is nothing that would get them upset enough to vote out of office the people who put us in this situation. Nothing. So, my advice is, "Enjoy". love the life our elected officials have given us. Enjoy the unemployment, no jobs, 25% more jobs are predicted to go overseas thanks to Nafta. Just enjoy. No America voter is capable of outrage. We're too stupid to vote them out.
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10-30-2009 @ 8:41AM
bigdave said...
you hit the nail on the head,people need to vote these bast---pout of office
10-30-2009 @ 9:34AM
raydelv said...
Wait a minute, I thought that a recession and unemployment was an inseparable relationship. So what the main stream media is telling me is that a recession can end but you can still have high unemployment. Ok so educated me, based on what is the recession over? If people are not working, not buying goods, banks are not lending, banks are still folding how come wall street is making money. Hence ending the greatest recession since the Great Depression. Can it be funny numbers like money for clunkers program, $8,000 credit for first time home buyers, goverment spending, a lot of private companies are still making money because they are providing services for the war effort. What I see is a Bernie Madoff scam. If your the government you can do this and not go to jail. If your a private citizen they lock you up for 150 years.
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10-30-2009 @ 11:31AM
Kay said...
Well said. The up-tick in the GDP was not authentic. It was due to the "clunkers" program and the housing credits. They are extending the housing credits so it will look like we are still growing. But the clunkers project was a clunker, and it is long gone. People do not care what you call it if they don't have jobs and can't pay their bills. The government is trying to put A GOOD FACE on SOMETHING so they can say, "See, we made it a little better." When in all truth, it would have been better faster if they had just left it alone. They are constantly blaming Bush so they don't have to take the fall come election time, but surely Americans aren't really THAT STUPID! All the egg heads who have never truly had a job thought they could implement these socialist agendas and they would work this time because they really look good on paper. Too bad they never studied history and found out that Socialism has NEVER worked! We need leaders who have actually had jobs and led them successfully, not stupid professors who have never lived in the real world. Those who can - do. Those who can't - teach. This equals Obama and all of his cabinet.
10-30-2009 @ 4:02PM
Chelo said...
Wall st is just a big ole ponzi sheme where the top dawg ceo's and politicians make millions. Why is the DOW up when unemplyment is at a all time high ?easy thats govt pumping millions into the market and economy (your tax money) to get everybody thinking all is well. They want the avg joe investor back in wall st so when you do they will pull out and you will be stuck with the bill. PONZI SCHEME at its best!!
10-29-2009 @ 2:44PM
LBJ033 said...
with obama the incompetent running the country along with the gang of thieves and perverts he calls staff unemployment could last until obama is removed from office
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10-29-2009 @ 6:54PM
tom said...
Just how do you know all of this? This recession was several years in coming. You expect a magic wand to be waved over the downturn and all of a sudden all is well? We borrowed like there was no tomorrow; we entered into two wars with no way out. We had people who never voted for their own self interests, only what their "conservative" party said. Corporate America could do no wrong. We deregulated like crazy. You expected a different result???
10-29-2009 @ 11:28PM
vaughnvdg said...
What they should be saying is IT WILL TAKE AT LEAST 3 YEARS TO GET THE JOBS BACK THAT DUMBYA BUSH OUTSOURCED.
10-29-2009 @ 2:48PM
BILL said...
To bring the jobs back to this nation how about telling all of those fine patriotic American companies that moved their manufacturing facilities to low cost nations that when the companies bring back their finished or unfinished products that the companies can only charge the cost of production in the nation where manufactured, and not U.S.Manufactured prices. It is time we stopped these companies from ripping us off. If they want to sell their products here make them here.
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10-29-2009 @ 4:01PM
Romad said...
Bill: Why should US companies manufacture here when Obama and the Democrats try every way to put them out of business?? (i.e. Highest corporate tax rate in the free world 30%+, overregulation, new EPA mandates and fines, Maybe CAP & Trade restrictions, union card check, fines if you don't provide health insurance for your employees...and on and on.) The government is a blood sucking vampire that taxes these companies to death and then demands that they stay here to remain unprofitable and uncompetitive in the world economy. Soon there won't be any U.S. companies left here to pay for all the entitlements and give-aways and socila welfare Obama is legislating. And we, the American sheeple, are stupid enough to keep putting these Democrats back in office. Dark days are ahead.
10-29-2009 @ 4:38PM
Susie said...
Amen, Mr.Obama how about implementing this suggestion.
10-30-2009 @ 2:48AM
Jim Fedullo said...
You are correct. I was a mgr w/ thomasville for many yrs. They moved their mfg plants over to china & vietnam, got cheap labor, no benefits, no overtime & many benefits from the countrys mentioned. Natuzzi leather from italy, drexel, & many more have done this but kept their retail pricing in effect w/ marginal discounts at sales. They are doubling their profits but it has now bit them in the ass w/ this on going recession. They are still charging the original pricing but making bigger profits. i still have some of my old pricing & by ck'g the new retail prices, none have gone down 1 penny but have steadily increased as usual. thomasville as many furn. co's have done fired all of their reps to make even more profits. this has turned into an evil country, where there is no protection at any for us.
10-29-2009 @ 3:00PM
Mike said...
I tend to agree, TJ. But, another factor is simply that we have more people than we need (from a pure employment point of view). We can't just make up jobs for people. Who's going to pay their wages? Bringing all the lost manufacturing jobs back wouldn't help that much; robots do a lot of that work now. And, as consumers, we are not going to pay higher prices so that companies can afford to pay people to just sit around and collect pay checks. . . We'd do well to figure out what we're going to do with the uneducated, unskilled, unemployed class until they die off. Meanwhile, give your kids get the education of a robotics engineer and the work ethic of an ant. They're gonna need both qualities to stay employed in the future.
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10-30-2009 @ 10:38AM
ddezwarte said...
Nafta is 20 years old, Get over it. People stop whinning and put your brain to work finding solutions. Or is that the governments job, too?
10-29-2009 @ 2:51PM
Jim said...
Some talk here about voting out all of the politicians and replacing them. Would it make a difference when the newcomers will follow lobyists as well? When it comes to voting it's the lesser of two evils. Well, here is one guy that isn't in favor of voting evil into anything. I may just decide to deregister from voting all together and become more seperate from the state, like the church is.
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10-30-2009 @ 7:18AM
lionel said...
THE ELECTIONS ARE " FIXED " WE ALL SHOULD KNOW THAT BY NOW ! Q
10-29-2009 @ 3:05PM
Gary said...
Oh nonsense, editor. The American people will believe the recession is over when unemployment begins to fall. No one expects the number to go back down to 4%, the only time it ever did that in the past 30 years was under Bill Clinton, at 3.9%, and that only lasted one month. Get real, Mr. Cohan. You helpeth the cause not.
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10-29-2009 @ 3:08PM
normsz69 said...
DUMP NAFTA NOW!
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10-29-2009 @ 11:49PM
CYFAN2 said...
WHICH DEMOCRAP PRESIDENT SIGNED NAFTA?
GOOD OLD CLINTON, HE WAS MORE WORRIED WHICH INTERN WAS NEXT ON HER KNESS THAN GOVERNING CORRECTLY
10-29-2009 @ 3:22PM
Russ Molzahn said...
I Moved to Budapest, Hungary and things are much better here than in the United States.
I feel for all of you suffering. Unemployed, underemployed, pay cuts, hour cuts, and the list goes on.
But the government states that the recession is over. That is because they have jobs and have not had to give anything back to their employers - YOU!
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