It’s The Recovery, Stupid

27 12 2011

This is a really interesting statistic.

If you judge the recent recession strictly by U.S. GDP, we have completely recovered from the downturn. In fact, we are back to where we were in 2007, prior to the recession.

From The Atlantic:

http://www.theatlantic.com/business/archive/2011/12/the-most-important-graphs-of-2011/250240/

 

This is their explanation:

“The chart shows real GDP in the U.S. and the level of total civilian employment from 2002-2011. The total output of the U.S. economy in Q3 of this year finally increased to a level above the output in the fourth quarter of 2007, when the recession started (blue line). In other words, the U.S. economy has now made a complete recovery from the 2007-2009 recession. But the labor market is still struggling to recover. We have 6.6 million fewer jobs today in the U.S. than in December 2007 when the recession started (red line in chart), along with a 8.6% unemployment rate, and thus another “jobless recovery.” On the other hand, it’s remarkable that the U.S. economy is now able to produce more output than in 2007, but is doing so with 6.6 million fewer workers, as a result of significant gains in productivity brought about by the severe recession. Therefore, the chart helps to tell the story of two different sides of an economy in recovery: we’ve seen huge gains in productivity and a recovery in output, but at the same time we see a labor market struggling to recover, with the possibility that it will take many more years or even a decade to regain all of the millions of jobs lost during the recession.” – Mark J. Perry, Ph.D., visiting fellow, American Enterprise Institute

However, unfortunately this recovery has occurred without a similar recovery in terms of job gains. Instead, the U.S. economy is now producing the same as it was in 2007, but now with 6.6 MILLION fewer workers!

This means that companies have eliminated all excess positions, have improved productivity to the point that people are just flat working more and harder. I am sure that automation comes into play for some of these lost jobs, but not all –and I’d even bet, not most.

People – and employers – have adapted to doing more with less. The real question for 2012 is going to be, where will the economy grow to the point that some of these 6.6 million people can get back to work?

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