– by Ravi Mikkelsen on 26 September, 2012 Employment StatisticsHiringOpen Job PositionsUncategorized
There has been a lot of sharing of the”Most Horrific Job Graph Ever” recently via social media to great effect. This (originally) two year old graph, was recently updated with more data, but a lot of the same analysis, adding to the original fear that it sparked then. It’s main purpose, showing that this recession has been worse than the others and the recovery is slower as well. What it doesn’t show (and those sharing don’t point out) is that we’re actually recovering at a faster rate than the previous slowdown and that we’re over 1/3 of the way back to a BOOMING economy.
Now, you might be saying to yourself, this guy’s nuts, there’s no way that we’re a third of the way to zero unemployment and a strong economy. Well, you’re right and you’re wrong. You’re right in that we’re not that close to getting to a point where everyone that wants job will have one. You’re wrong in that this is not nor should it be our end goal. If you didn’t actually say that second part then you would only be right.
A large portion of our current economy didn’t exist during those previous recessions and recoveries so I don’t believe we can accurately compare them to each other and so I suggest that we only look at the last 13 years. During periods of strong economic activity in the US, unemployment has either held steady at, or decreased until it reached around 4%. A number that is arguably close to optimal for controlling inflation and keeping competition in the job market. The frame of reference I have personal experience with and also the one that most closely matches our current economy would be the boom of the late 90s, peaking at 3.8% in April of 1999. This was quickly followed by the BUST and a steady increase in unemployment until June of 2003 with an unemployment rate of 6.3%.
In May of 2007, the markets were heady once again with real estate prices going through the roof and the financial sector on a similar tear, the unemployment rate had gone back down to a very strong 4.4%… Alas, the gains were short-lived. Over the course of the next 2.5 years, it would more than double to a high of 10% in October of 2009.
Let’s look at the last three years to see how the unemployment rate is changing:
Oct 2009: 10.0%
Oct 2010: 9.5% (-0.5% per year)
Oct 2011: 8.9% (-0.6% per year)
Aug 2012: 8.1% (-0.96% per year)
Looking deeper into the data we can see that, the previous recession recovered 1.9% over 47 months, the economy this time has done the same in just 34 months and the rate at which we’re recovering is speeding up as well. We’re 1/3 of the way back to the magic 4% line and we need to put more effort into new companies, programs and methods that will keep building the pace. If we continue to recover jobs at our currently increasing rate, we’ll be back down to 4% unemployment in the first half of 2014. Is this possible? Yes. Is it probable? Depends on too many variables for this one post, stay tuned for more.
Let’s keep this trend line going and if it comes true, I’ll buy anyone dinner that reminds me of it.