Unemployment – the long hard road to an employment recovery

The unemployment rate is back near 10% and the economy barely created any jobs in November, highlighting the problem the economy faces in generating meaningful gains in employment.

So it comes as no surprise that the Fed has embarked on a new but controversial round of quantitative easing, while politicians in Washington continue to focus on ways to speed up the recovery.

Let’s take a moment then to graphically demonstrate how tough it has been for job seekers and the many who fear that a job loss may come their way.



The chart above looks at employment trends during the latest recession as well as the harsh recessions the economy entered during the mid 1970s and the early 1980s.   The unemployment rate soared in all three recessions, but job losses during the current slump have been about double on a percentage basis.

It also confirms that the uneven economic recovery, beginning in month 19, has failed to make a meaningful dent in the unemployment rate. In fact, the economy has yet to get us back to where we stood when the recession ended (clearly viewable in last chart), let alone coming even close to surpassing the peak level of employment reached when the economy entered the recession.

Jobs following recession’s end
The charts below provides a different angle and focuses on what happened after the recession was officially declared to have ended.

Recapping what was said above, the blue and red lines, which look at the 1974-75 and 1981-82 recessions, reflect a robust recovery in employment that was generated by strong economic rebounds.

But the last three recessions underscore how cautious firms have been in adding staff – blame more modest recoveries (see CHART).



The final chart focuses only on the recoveries from the 1991, 2001 and 2008-09 recessions, providing details that weren't available in the second graph.

Despite the trouble many are facing today trying to find meaningful employment, the recession that marked the start of the last decade, at least on a percentage basis, did the worst job when it came to generating new employment opportunities.  That happened following the extremely mild 2001 recession.



Still, the unemployment rate peaked at under 6.5% during that recession, offsetting some of the sting from that jobless recovery.