The U.S. economy has had 10 recessions since 1948. Until 1980, it took an average of nine months after these downturns formally ended, and never more than a year, for employment levels to return to normal. Then, for reasons that aren't fully understood, things changed.
After the recession of 1990 it took nearly two years for jobs to reach their pre-bust peak. Following the dot-com crash in 2001, it took 39 months. That raises an obvious, but crucial, question: Which path are we on now? Will the economy and job growth mirror those earlier, faster recoveries or stay stuck in the mud for years?
Economists Josh Bivens and Heidi Shierholz fear it could be the latter. They write in a new paper that "this recovery is currently 'jobless' and has been for quite some time. Worse, even when it is no longer technically jobless (that is, when we have positive employment growth), the unemployment rate will likely not fall substantially for a year or even longer."
Our latest Great Recession officially ended in the middle of last year. Under the best case scenario, assuming that jobs rebound at roughly the same rate as during the early 1980s dip, employment will hit its pre-recession peak in September 2011, Bivens and Shierholz project. But if the economy follows the pattern of the last two recessions, employment won't fully recover until 2013 at the earliest, and perhaps later (see chart at bottom).
The dismal science is, of course, notoriously fickle. As they concede, economists get things wrong all the time (Eugene Fama, anyone?). At the very least, however, the data above offers a sobering perspective on our current mess. The metaphor of choice to describe the latest job numbers -- "turning the corner" -- doesn't seem quite right.
More important, the duration of this jobless recovery has major public policy implications. With the economy stuck on idle, we need to consider another major fiscal stimulus, along with other job creation measures. If not, we may be marching in place for quite some time.