By John Cookson, CNN
With little fanfare, U.S. gross domestic product (GDP) has returned to where it was in the second quarter of 2008, before the worst downturn of the great recession. Annual GDP is back over $13.3 trillion (in 2005 dollars), according to new data from the Bureau of Economic Analysis. Overall, U.S. output increased by 2.5% in the third quarter of 2011, an uptick from 1.3% growth in the second quarter.
If economic output is back, why aren’t jobs? As Byron Auguste of McKinsey Global Institute explained in our GPS special Getting Back to Work, recent recessions are different. Each economic downturn has had a lag between when GDP recovers to pre-recession levels and when employment catches up. But as the chart above shows, for much of the last century this lag was about half a year. At most it was eight months. But something changed starting with the 1990 recession, which had a lag of 15 months, more than double the length of the 1981 recession. The 2001 recession took even longer to recover employment, more than doubling the duration of the 1990 recession.
The great recession lag has been longer still. At current job growth rates it will take five years for employment to recover. What explains this change? Globalization creating more competition for the U.S. workforce? Automation and technology raising productivity per worker while requiring fewer workers? Magic? Tell us what you think below.
Clearly it is a combination of the factors you allude to and not to any one, simplistic "villain". If there is another recent factor that should be mentioned but which you duck, however, it is the inability of the political leadership to really lead. When decisions are made by reading the lowest common denominator from the latest polls, or following the dictates of self serving lobbyists rather than doing what is right one gets what we have.
Joblessness recoveries correspond to the "unbalancing of our economy". We now have a service economy that in some cases barely provides a living wage. This was camouflaged a huge trade-gap financed by our borrowing as a nation and the long lasting housing bubble. The truth is we don't make very much any more. American "industrial production" has fallen off a cliff. We have transfered our technology and jobs for decades. Even "Apple" the largest company by market cap in America s not made here.
This is symptomatic of the problem. We don't make enough of what we consume, or produce enough other stuff for export. Unlike Germany that has a "national industrial policy" that has maintained domestic industrial jobs and ensured its status as a net exporting country, we have weak programs and ineffective jaw-boning that doesn't translate into a defiinitive, strong "American industrial policy" plan that ensures Americans jobs first and foremost!
The programs politicians propose, like more consumption, cutting government, tax the rich, flat tax, and tarrifs just address the symptoms, and dances around the real problem. We need to re-industrialize America to produce here with the addition of developing light industry. Virtually everyone we have a negative-trade balance with represents American jobs gone somewhere else.
I say lower taxes on domestic production over 5-years, while raising taxes sharply on foreign goods targeted to this market over 5-years. The fed. gov. can get with states to offer declining incentives over 5-years to invest here. Some people have called this protectionism. None sense! It is our internal policy. China reguires you to open a factory, devulge your patients which they steal, and take a 51% Chinese partner. I say our policies should allow us to compete and win.
This is not 30's protectionism. Jobs have not dried up, just gone somewhere else. The second largest economy does not play by our rules and considers them irrelevant. We need a new set of rules that allow us to win. We need a definitive 'American industrial policy" that takes care of our citizens first and foremost! Producing nations win, consuming nations become debtors.
The recession is over. What we have now is the same economic malaise, hopelessness and anger that infected the country in the late 1970s. People said the same things about America then that they're saying now: America is finished, you'll never achieve what your parents achieved, the rich get richer and the poor get poorer, the system is rigged against the little guy. Some people even thought socialism looked like a better deal.
Look beyond all the anger and hopelessness and you'll see it: America is in the Jimmy Carter phase of the next Ronald Reagan revolution.
I don't count the money spent on "true" inflation as an increase in GDP. Therefore the recession hasn't ended.
This article is a joke ? Right ? We are in a DEPRESSION and sliding downhill . Why do you think people are protesting on Wall Street and all over the country ?
Labour forces in the U.S. are not the only ones that face these challenges: globalisation and technology. Others elsewhere do the same. It's all about how to cope with the situation and make the best out of it.
Downturns used to be easier to rationalize. Demand for durable goods declined as comsumers waited to purchase cars and consumer durables, and businesses delayed purchases of capital equipment. Job losses used to be concentrated in the durable goods manufacturing sector. Once demand recovered, people came back to work in the manufacturing sector. As recently as 1981-1982, 62% of job losses in the downturn were in the durable goods manufacturing sector. In the recent downturn only 21% of jobs lost were in durable goods. Today only 1 of 15 private sector jobs are in that sector. Downturns will no longer be sharp declines followed by quick recoveries because so few jobs are in manufacturing. In this downturn employment fell for 31 months, twice as long as 1981-2, and job losses were spread more evenly across all sectors of the economy.
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