Earlier today, the U.S. Bureau of Labor Statistics released the eagerly anticipated unemployment numbers for May, revealing a 1-point increase in the jobless rate (from 8.1 percent to 8.2 percent) over the last month coupled with an underwhelming 68,000 new jobs created. Although the numbers were widely panned as dismal, the worst in a year, raising red flags about the recovery, and even indicative of a global economic slowdown, it’s important to keep in mind the broader trend when reading these reports—slow, but steady improvement in the jobs picture, despite a number of reverses similar to last month’s. This includes the 27 straight months of private sector job growth and the creation of 4.2 million private sector jobs since the end of the recession.
Perhaps most critically, the current recovery has already seen several such periods of stagnant employment growth, yet the overall trend in job creation has been entirely positive in the period since the formal end of the Great Recession in June 2009. When labor market improvement stalls (as it is appearing to stall now), it stalls at a higher plateau than where it stalled the previous year, before continuing to make gains again over the rest of the year. In the months since the end of the recession, the economy has consistently gained back the jobs lost to the recession in fits and starts, perhaps, but showing long-term improvement nonetheless.
Although the chart tracks the length of time the economy has taken to return to pre-recession employment levels, the nation’s unemployment rate has followed the same basic trend of long-term improvements interspersed with late Spring/early Summer periods of stagnating job growth. National unemployment peaked at 10 percent in October of 2009. By June 2010, the jobless rate had dropped to 9.4 percent by April, before rising again to 9.8 percent In November. In 2011, the nation began the year with 9.1 percent unemployment, which dropped to 8.9 percent in March before rising again to 9.1 percent in August. This period was followed by eight straight months of job growth through the Fall of 2011 and the Spring of 2012—during which unemployment rate dropped to 8.1 percent in March and the labor market replaced almost 98 percent of the jobs that existed at the beginning of the recession.
So should we hyperventilate over the one-point increase in the nation’s jobless rate? Probably not—the labor market has acted this way before, improving in fits and starts over the long arc of the recovery, and will likely continue to do so absent a global economic downturn (which may well be in our future—see the ongoing meltdown in the Eurozone and recent big losses in the US stock market—and would certainly derail our own recovery). While the news is undoubtedly not as positive as we would like—especially given the drop in labor force participation and growth in the number of the long-term unemployed—it is still more positive than you probably thought when reading this morning’s headlines.