News/Blog
Job Growth After Most Recent Recessions
July 6, 2010
The number of payroll jobs bottomed out in December 2009, but the recession most likely ended a few months before that since GDP turned positive in the third quarter of last year. The National Bureau of Economic Research, the committee of academics responsible for setting business cycle dates, has not yet determined when the recession, which began in December 2007, officially ended. They usually wait from six to 18 months after a recession has started or ended to announce the month, ensuring that they have all the relevant data points in place to make the call. For the sake of comparison, let’s assume that June 2009 was the trough of the most recent recession, which enables us to compare job creation during the early stages of recent expansion cycles. Following post-war recessions up to and including the 1981-82 recession, vigorous job creation typically began at the same time the recession ended or shortly afterwards. But the next two recessions in 1990-91 and 2001 were followed by delayed and anemic rebounds in the labor market, which have been termed “jobless recoveries.” These are most likely due to higher levels of productivity enabled by technology and the waning share of manufacturing jobs in the labor market. If the most recent recession did indeed end in June 2009, the labor market since then has been performing reasonably well compared with the last two cycles even though private-sector job creation cooled in May and June. However, the labor market dug a much deeper hole during the most recent recession and will take longer to recover. Twelve months after the 1981-82 recession had ended, total payroll employment reached a new high. After the 1990-91 and 2001 recessions, employment reached new highs 23 and 39 months later, respectively. Assuming the labor market can generate moderate, respectable job growth of about 2.5 million payroll jobs per year going forward, it will take another three years to set a new high. Even then, the unemployment rate is likely to remain higher than desirable because the labor force will continue to expand during the recovery period.
Source: U.S. Bureau of Labor Statistics, Grubb & Ellis
-Bob Bach, Grubb & Ellis Senior Vice President, Chief Economist
