Labor Market Recoveries

Friday, March 05, 2004 | 10:36 AM


click for larger chart
Source: Joshua Shapiro, MFR

Labor Market Recoveries tend to gain momentum over time: The two heavy lines illustrate start of "normal" recoveries -- those are post recession periods where job growth begins. Each of the boxes include the "official" start of each respective economic recovery (Apr. 1991 and Dec. 2001).

In the previous "jobless recovery," it was ~11 months until job growth started and 18 months until a stronger pace of job growth emerged. This time around, we were 21 months into the official recovery -- and as this morning made clear, still no sustained job creation.

Here's a quote from the clearheaded Joshua Shapiro:

"The bottom line is that the February payroll change, net of downward revisions to December and January, was -2K. This is simply unacceptable at this stage of an economic recovery, and there is no way that the FOMC will contemplate starting to tighten monetary policy until we have had several months of robust job growth. Moreover, although the near-term path for real GDP growth remains solid, growth prospects in the second half and into 2005 are threatened if job growth does not begin to pick up very soon. The effects of copious tax refunds and other fiscal and monetary stimulus will be fading then, and it is imperative that consumer spending is supported by solid employment growth. At this stage, this remains only a forecast, which is very disappointing."
This continues to be the most important issue -- economically and politically -- facing the nation.

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