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The Atlanta Fed's macroblog provides commentary on economic topics including monetary policy, macroeconomic developments, financial issues and Southeast regional trends.

Authors for macroblog are Dave Altig and other Atlanta Fed economists.


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October 07, 2011


Two more job market charts

Correction: One of macroblog's careful readers noted we mistakenly stated that the job creation pace from January 2011 through the date of the blog posting averaged 96,000 jobs per month. The 96,000 jobs per month actually applies to the average job creation pace over the previous three months at the time of the posting. We made this correction in the last sentence of the second paragraph. (10/21/11)


If you are looking for the full rundown on the September employment report, there is, as usual, plenty of good commentary to be found in the blogosphere. I'll add a couple more graphs to the pile, similar to exercises we have done with gross domestic product in the past.

Payroll employment growth has averaged about 110,000 jobs a month since February 2010, the jobs low point associated with the crisis and recession. This growth level compares, unfavorably, with the 158,000 jobs added per month during the last jobs recovery period from August 2003 (the low point following the 2001 recession) through November 2007 (the month before the recent recession began). One hundred and ten thousand jobs a month compares favorably, however, to the 96,000 job creation pace for the past three months.

Are these sorts of differences material? If the economy can find its way to creating jobs at the same rate as the last recovery—which nobody remembers as particularly off-the-chart spectacular—we would be back to the prerecession level of overall employment by spring 2015. If, on the other hand, we can only eke out the sub-100k pace we've seen this year, that date moves out to 2017:


So we do eventually get there in terms of recovering the jobs lost during the course of the past four years. The same, unfortunately, cannot be said of the unemployment rate. Because the unemployment rate has more moving pieces—like assumptions about labor force participation rates (or how many people jump in and out of looking for jobs)—back-of-the-envelope calculations are a bit more speculative than the simple employment paths in the previous chart. But with a few assumptions, such as the presumptions that the labor force will grow at the same rate as census population projections (for the aficionados, my calculations also assume that the ratio of household employment to establishment employment is equal to its average value since January of this year), the unemployment rates associated with job growth of 158,000, 110,000, and 96,000 per month would look something like this:


These paths are just suggestive, of course, but I think they tell the story. The same jobs recovery rate of the prerecession period would get the unemployment rate down below 7 percent in four years or so. But at the pace we have been going this year, things get worse, not better.

Update: Many other fine pictures are available at Angry Bear, Mish's Global Economic Trend Analysis, The Capital Spectator, Modeled Behavior, and lots from Calculated Risk (here and here, the latter with related links). At Econbrowser, guest blogger Mike Duecker delivers forecasts for 150,000 jobs per month—but not until mid-2012.


David Altig By Dave Altig, senior vice president and research director at the Atlanta Fed

 

October 7, 2011 in Data Releases, Employment | Permalink

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Comments

it would be interesting to compare public sector job losses in this recession to the last and see if that's the difference...

i believe ~600,000 jobs have been lost in state & local govt. this time around...

Posted by: rjs | October 08, 2011 at 04:44 AM

Does it matter that the job growth is in the private sector? We are losing jobs in the public sector, so growth in the private sector, if I recall correctly, is not that far off from what we had in the last recovery.

Steve

Posted by: steve | October 08, 2011 at 10:55 AM

Absolutely fascinating work. I can't help but notice a re-pricing going on as well. Certainly in regard to consumer durable's, real prices seem to have been falling, domestic wages as well appear in some sectors to be re-adjusting as well. Is there something going on in the economy of which unemployment is just a symptom?

Posted by: Thomas A. Coss | October 09, 2011 at 01:16 PM

steve,

Private sector employment, as of mid-September, was 109.3 mln (says the payroll survey). In January of 2008 (the peak), it was 115.6 mln. So here we are, 19 months from the trough in private payroll employment, and still 6.3 mln shy of the peak in private employment. If the growth pace is as good as it was in some prior recessions, it is still a far cry from what is needed to restore the prior peak in private employment, much less absorb new labor market entrants.

Government employment, at 22 mln in September, was 582k below the peak (ex-census), and still falling. Public sector job losses are vastly smaller than the current shortfall in private jobs. It would be good to have an increase in any form of employment, but it is weak demand for workers in the private sector which is at the root of our labor market problems.

Posted by: kharris | October 11, 2011 at 12:59 PM

Why hire when you can do more with less? This American system of labor is not only broken, it's dead. All of you are better educated, and more productive than any of your ancestors for what? A "manufacturing" job? Please.

Perhaps a job isn't what Americans should be looking for anymore. Let the Asians work, I'll surf the web.

Posted by: FormerSSResident | October 13, 2011 at 07:43 PM

Another view at the same topic. It is better to use real GDP per capita instead of job creation in order to predict unemployment: http://mechonomic.blogspot.com/2011/10/some-corrections-to-david-altigs-job.html

Although, for employment is should work by definition.

Posted by: kio | October 15, 2011 at 05:46 AM

Wow, so you're saying a 2 year shock will take ~15 years to undo assuming best case scenario...

Posted by: Ess | October 16, 2011 at 01:51 AM

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