NC Budget and Tax Center

Why the national jobs numbers aren’t as bad as you thought

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.

6 Comments

  1. Frank Burns

    June 1, 2012 at 4:25 pm

    Alan is asking us to accept mediocrity as the new normal. That is totally unacceptable. Obama has left 6.5 million jobs on the table due to his own misunderstanding of the economy and inadequate leadership. http://news.investors.com/article/613025/201205300911/obama-recovery-much-worse-than-average.htm?p=full

    Are you trying to justify the incompetance of Obama?

  2. Allan Freyer

    June 1, 2012 at 4:49 pm

    As common-sense would suggest, the greater the job losses from a recession, the longer it takes to replace those job losses. Since this was the worst recession since 1929-33, it’s unsurprising the labor market isn’t recovering as quickly as it did from other recessions of shorter duration and fewer job losses. We recently published a piece on this as it relates to NC’s recovery: http://www.ncjustice.org/?q=node/1400).

    Given that a majority of the job losses from the Great Recession took place before Obama was even inaugurated (much less before his policies were enacted), I’m not sure it’s all that persuasive to say Obama “left jobs on the table,” whatever that actually means.

  3. david esmay

    June 1, 2012 at 5:05 pm

    Hey Frank, where were you when Bush was hemorrhaging 800,000 jobs a month? No one spells incompetence like the GOP.

  4. Mark

    June 1, 2012 at 5:34 pm

    Hey David stop blaming Bush with Obama’s stupidity on jobs. And mr Alan trending is a big excuse or cover for underperformance. The fact is since Obama took over America has gone poorer.

  5. Frank Burns

    June 1, 2012 at 7:15 pm

    Believe me the populace is getting sick and tired of Obama and his apologists blaming something or somebody else for his own inadequacies. This is often referred to as poor, inflexible leadership.

  6. Alex

    June 2, 2012 at 7:22 am

    There’s simply no way to sugarcoat these numbers. Once we stop the printing presses with borrowed money, the economy just dies because it has no permanent direction. Obama has put us on a clear path towards insolvency, and if we give him another 4 years, he will complete the job.