Journal Article

A closer look at jobless recoveries

Abstract: Most analysts believe the U.S. economy is now recovering from the recession. Yet businesses continue to lay off workers, prompting The New York Times to dub this \\"the worst hiring slump in 20 years.\\" Market analysts and economists have a different name for what is happening. They call it a ?jobless recovery.?> The only other jobless recovery in postwar U.S. history occurred following the 1990-91 recession. In the early years of that recovery, forecasting models based on data from past business cycles predicted that the observed pickup in output would be accompanied by employment growth. Those forecasts were consistently wrong and left policymakers puzzled by businesses? continued trimming of payrolls.> Today, policymakers are trying to understand the unexpected joblessness of the past two recoveries. Will employment be stagnant in future recoveries? This possibility makes understanding the behavior of employment in recoveries, especially jobless recoveries, a priority.> Schreft and Singh take a closer look at jobless recoveries and find that they have many common features that distinguish them from the typical recovery. Understanding job growth, an important variable for evaluating economic activity, may enable policymakers to more accurately forecast the pace and strength of recoveries and to develop more effective policy responses to weak employment growth.

Keywords: Employment (Economic theory);

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Review

Publication Date: 2003

Volume: 88

Issue: Q II

Pages: 45-73