With retailers reporting cheerier reports for March than analysts expected, some economists and econo-pundits are beginning to revise their skepticism about the duration of high unemployment. The logic goes: if spending ramps up more quickly than anticipated, then the U.S. economy will improve fast too. That will create more jobs than we thought.
For a few examples of newfound optimism, check out a Bloomberg article here and one by Floyd Norris in the New York Times here. Is there now reason to believe that employment will experience a steep recovery? Not when you consider the structural changes in the economy and depths of underemployment.
Structural vs. Cyclical
Most recessions are cyclically driven. The business cycle hits a trough, firms lay off workers. As the economy recovers, those workers get hired back before long. This time it's different. The real estate industry experienced a major correction. Many people who were in that sector can expect to experience prolonged unemployment. Even when the broader economy improves, real estate will not return to its 2005-2006 levels.
Proof of this can be seen by analyzing the latest job numbers from the BLS and comparing them to stats in prior reports. The economy has lost 8.2 million jobs since the recession began in December 2007. That's 5.9% of total jobs at that time. The key is thinking about how those might be recovered.