The graph below shows total nonfarm employment (blue
line) from 1940 thru November 2009. Also shown are the
normal highs and lows (grey lines) about 5% from the
blue line. The blue dot on the right is the BLS
projection for 2018, and the black line is the
statistical best-fit (normal conditions).
Notice the following:
- Total employment today is lower than it was in
2000, almost 10 years ago
- This is the first time since 1940 that we have
been below the low-normal range
- We are now 10 to 15 million jobs "behind the
curve" (if you will)
Between now and 2018 (9 years), we need to add 21
million new jobs to get back on the curve (black line).
The most new jobs we have ever created in 9 years was
24.2 million between 1991 and 2000 ... so it is
possible. However, the average number of new jobs
created in 9 years (for the last 25 years and excluding
this recession) is 17 million. And, employment growth is
slowing down. You can draw your own conclusions from
this.
Now shift gears and let's approach the recession
recovery differently.
The graph below shows the annual employment growth
(year over year) from 1940 thru November 2009 (blue
line). Also shown is the statistical average (green
line) to approximate the workforce growth rate. The
black lines in 2010 and forward are possible recovery
timelines. Watch the video on the
Job Market Report to
understand this better.
Notice the following:
- Deep recessions (40s and 50s and more) recover
quickly, typically within one year
- Shallow recessions (1991 and 2008) recover
slowly, taking 1 to 2+ years
- This is the deepest recession since 1949 (1945
was even deeper)
Also notice that every recession ended just before
the blue line turned up. It is VERY likely that the
current recession was over in August 2009.
Since this recession is deep, we could easily recover
in one year. By "recover" we mean getting to the point
where we're adding jobs. Above the black line in the
graph below is adding jobs, and above the green line is
adding jobs faster than the workforce is growing.
HOWEVER, once we recover and start adding jobs, we
have to absorb the 10 to 15 million people who are now
out of work. This will take time (discussed above under
Total employment).
The "W" shaped recession
Notice the "W" shaped recession between 1980 and
1984. This is where two recessions were virtually back
to back ... a double-dip.
Some analysts are worried that we may have another
W-shaped recession today. For what it's worth, deep
recessions have never double-dipped. In fact, the
W-shaped recession in the early 1980s was very shallow
and only happened once.
Post recession unemployment changes
Between 1950 and 1984, the unemployment rate dropped
immediately after the "official" end of every recession. In the
last two recessions (1991 and 2001) unemployment increased by
less than 1%, shown below with brown circles.
It remains to be seen what will happen to unemployment after
the end of the 2009 recession. From these data, one might
conclude that it will rise a maximum of 1%. However (read the
Total Employment analysis at the top of this page), we are
outside the normal limits of employment variation for the first
time.
The take-away
Here are the highlights of this page:
- This is the worst recession of a lifetime for
almost everyone in the workforce
- The recession was probably over in August 2009
- Recovery to the point of adding jobs can be
quick, as early as mid-2010
- Recover to the point of absorbing the 10 to 15
million unemployed will take years
Hope this analysis helped. If you're a "student" of
these kind of analysis, let me known - we should compare
notes. Email
Mark@JobBait.com.
|
