Will the employment recession last another three years?
During the last recession in 2001, there were 22 months between the time that GDP started growing and the time that job growth resumed, according to The Boston Globe. Of course, this current recession has been far worse, so it could be three years before we start to see job creation.
This comes to mind in analyzing today's report that GDP grew 3.5 percent in the third quarter. It certainly helped that durable goods spending spiked 22.3 percent, as the Associated Press reported, with help from the $4,500 cash-for-clunkers rebate program -- and that housing constructing spending soared even higher, up 23 percent, thanks to an $8,000 first-time home purchase tax credit, according to Bloomberg.
But it really is all about jobs. And the news that new jobless claims fell less than expected to 530,000 last week and that 7.2 million are unemployed points to an important problem -- with 70 percent of economic growth coming from consumer spending, it is too early for the private sector to pick up the slack should the 7.9 percent increase in government spending start to fall.
Given that the National Bureau of Economic Research dates the current recession from December 2007 -- the time job growth went negative -- the question of when job growth will resume is of more than academic interest.
People in the U.S. will not believe that the recession has ended until the unemployment rate starts dropping fast from 10 percent back down to four.