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The Recession is Over… Because Jobs are Back?

In November, both the number of unemployed persons, at 15.4 million, and the unemployment rate, at 10.0 percent, edged down. At the start of the recession in December 2007, the number of unemployed persons was 7.5 million, and the jobless rate was 4.9 percent. (via Bureau of Labor Statistics report)

Why it might be false: One positive jobs report is kind of like a diamond in the rough when you look at it against the backdrop of other employment indicators, such as the high number of laid-off workers who don’t see jobs on the horizon; part-time workers are an army of 9.3 million—the highest ever; and the number of people collecting unemployment benefits stands around 10 million. Ten million.

And the idea of a “jobless recovery” doesn’t seem to make much sense in some ways. Let’s see: with no jobs, there’s no income and no spending power. We like this quote from Obama: “Good trends don’t pay the rent.” Word. Improvement in some macro indicators like GDP growth and a stronger stock market may provide some comfort to companies and investors, but what kind of “recovery” is that? Without jobs and better credit options, the recession won’t “feel” like it’s over.

Why it might be true: On the other hand, combined with the fact that GDP has already been growing for months, we may now be living out the calls for a “jobless recovery.” Consider, with every downturn in the economy, companies get smarter — they learn more efficient ways to run their businesses. They increase margins, cut bloat, get down to brass tacks. Each time, a new normal emerges, and this one may include a higher unemployment rate — or at least a new type of employment, where the standard measure of unemployment remains higher. In this scenario, any improvement in jobs data — in addition to a drop in the unemployment rate, there were also only 11,000 layoffs recorded for the month of November — may be a sign that the “recession” may be over.

Our call: Even Ben Bernanke is dragging his feet on declaring the recession’s end. In addition to a weak job market, credit is still nothing like it used to be, and consumers overall remain cautious.

A stronger jobs report is the first step in the right direction, but it’s little solace for the millions still combing through employment sites, sending resumes and setting-up networking meet and greets. The jobs report warms the cold of the recession, but it’s far from the security blanket of a growth economy.

Tags: economy, recession, recovery, The Recession Will End...