Commentary
The big picture on employment and recovery
3 Feb 2012 by Jim Fickett.
Backing off to look at the big picture, it is clear that
- the medium-term trend is probably for job growth slightly faster than that of population
- we are not going to really catch up on lost jobs (i.e. come back up the the dashed line in the figure below)
What is going on? I have pointed out before (On the value and limitations of the "stall speed" concept) that in the last few recoveries there has been a post-bounce deceleration, looking almost like a mini-recession. I think that's what we've just finished, and we are now in the mini-bounce following that. So yes, this is a pretty positive employment report, at least in light of the last few years. And it does add weight to my view that the US is pretty likely to avoid a near-term recession, provided Europe does not crash. But it does not change the medium-term outlook of sluggish growth and slow recovery.
Discussion
Jim,
What do you think of the influence of accelerating automation here? Many (eg Jeremy Rifkin in 'End of Work', or more recently Erik Brynjolfsson and Andrew McAfee in 'Race Against the Machine') argue that the Information Age increases unemployment globally and monotonously. This trend may for a long time dominate all other cyclical economic forces, and so the past recoveries would have limited information value.
Otto
Hi Otto,
At least for the US, I would think that automation and off-shoring are relatively stable long-term negative trends for employment, on which the cyclical patterns are superimposed. My hunch is that you can add to this a negative long-term trend from excessive credit intervention by the Fed. To me all this seems in keeping with the progression of successively worse recoveries from the last four recessions. Why would the automation trend completely swamp the cyclical patterns?
I don't think that the automation trend would completely dominate/swamp the other cyclical patterns, at least not yet. But of those other forces, automation alone is likely growing in a super-linear fashion (exponentially), and thus increasingly driving the overall outcome.
Very interesting. Is this a measurable fact, or a projection?
This is just my speculative belief and I'm interested to hear how you see it, Jim.
Maybe I'll get a chance to read the books you mention. I wonder if the World Bank, IMF, or some other body attempts to calculate a world unemployment rate.