Jobless Recovery Redux
The Federal Reserve Bank of Atlanta’s macroblog provides a good look at the evidence that points to the likelihood that the emerging recovery will be a jobless one. First, despite what has been an appreciable improvement in corporate profits during the third quarter, businesses have chosen to hold the line on hiring new workers as they cope with uncertainty about the economy’s performance beyond the next quarter or two. Once the recovery gains some momentum and enters a self-sustaining phase, there should be some firming in hiring activity. Still, the piece points to a troublesome sign that suggests the unemployment rate will remain uncomfortably high for quite a while. As of September, 56 percent of unemployed workers labeled their job losses as permanent—more than 10 percentage points higher than in any modern recession. This might be a problem of perception by those responding to the survey, but it does point to the fact that even as the economy gains traction and job growth resumes, businesses will have to ramp up hiring significantly in order to make a dent in the unemployment rate.
10-22-2009 4:30 PM