Pre-Recession Unemployment Rates May Not Be Reached for a Decade
WASHINGTON, DC - As recent calls for additional
stimulus and the extension of unemployment benefits meet with stiff
opposition, Congress appears to have underestimated the profound effect
of the current recession on the labor market. A new
report from the Center for Economic and Policy Research
(CEPR) shows that with a job growth path comparable to the last
recovery, the economy will not recover all of the jobs lost in the
recession until March 2014. Assuming the trend rate of growth in the
labor force, the unemployment rate will not fall back to the
pre-recession level until April 2021.
"The economy desperately needs action on job creation," says John
Schmitt, a senior economist at CEPR and a co-author of the
report. "At current and projected job creation rates, we will still be
suffering from the effects of the downturn well into the next
The study, "The
Urgent Need for Job Creation," compares various job growth
scenarios with the job loss seen in the recession and projects when the
lost jobs will be regained and when the unemployment rate will return to
pre-recession levels in each case.
Considering more rapid periods of growth, the analysis shows that
using the fastest period of growth of the 1990s expansion, the economy
does not reach the December 2007 level until September 2012 and does not
create enough new jobs to return to the pre-recession unemployment
level until September 2014. If the even faster growth rates of the
mid-1970s and early-1980s are applied, the economy returns to December
2007 employment levels in November 2011 and pre-recession unemployment
rates by October of 2012.
Current CBO projections indicate that future job growth will fall
somewhere between the rates of the two most recent expansions. This
means that absent serious job creation policies, the economy will not
reach pre-recession levels until well after the 2012 election cycle
(June 2013), and not return to an unemployment rate near the
pre-recession level until August of 2015.
The full analysis can be found here.