Growth is the cure for high unemployment

The economy created 151,000 jobs in October while August and September were revised upward by 110,000.  The unemployment rate held steady at 9.6%.


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As the economy has continued to expand, albeit at a modest pace, the private sector has added jobs for ten consecutive months, including at least 100,000 jobs each month over the last four months.

Still, it takes about 150,000 new jobs each month just to keep the unemployment rate from rising. Consequently, the recent upward trend, though encouraging, suggests that any celebration at this juncture would be premature.

Structural unemployment? No way!
I am not in the camp that believes we are facing structural unemployment, or job seekers that don’t have the required skills to fill open slots. So what's the solution – a faster economic recovery!


(click chart to enlarge)

The chart above goes back to 1981 and highlights the close correlation (0.83 for those who love stats) between economic activity and job growth, signaling that a faster economic recovery would very likely translate into increased hiring by businesses.

As already mentioned, the solution is simple.

But the formula that might create a faster recovery has been elusive and may remain elusive because an economy that is thrown into a recession by a financial crisis does not mend quickly.