This morning’s data from the Bureau of Labor Statistics regarding December employment was somewhat worse than expected. I wish I had a dollar for every time economic data over the last few years has been “worse than expected.” Maybe there are some flaws in how experts determine their expectations. According to the BLS, “nonfarm payroll employment increased by 103,000” last month, which is not enough to make up for population growth. Still, that’s better than losing jobs, and the numbers for two previous months were revised up (so don’t be surprised if this number is revised upward too). The unemployment rate fell pretty significantly from 9.8% to 9.4%, which might create some illusory optimism. With so few jobs created, the only way for the rate to fall that much is for many more people simply to give up and leave the labor market.
This graph is from Calculated Risk , an indispensable website for looking at raw economic data. I’ve been writing about job losses a lot lately, and about the need to focus on maximizing employment if the economy is going to generate the necessary escape velocity to get out of this downturn. As you can see, the 2001 recession created a shallow dip in employment, but look at how long it took to get back to the pre-recession level. Calculated Risk has all sorts of interesting graphs; I encourage readers to check them out. The one I’m using can be found in this post, which also contains a great graph dealing more specifically with the declining labor force participation rate.