Human Capital: Unemployment Predictions
Called “tepid,” during May, the US unemployment rate was 7.6% and job creation was an “okay” 175,000.
The Hamilton Project at the Brookings Institution perfectly displays what tepid means. If we add 175,000 jobs monthly (orange line in the graph, below), we will not return to the 4.6% pre-recession 2007 unemployment level until November, 2022. Even with 472k extra jobs a month (the first line on the left in the graph), still, we will not be back at pre-recession until 2015. (Next line is 321k jobs, then 208k.)
Further thinking about “tepid,” I recalled a 2010 Washington Post graph (below) that connected unemployment to GDP growth. Again we are looking at 2022 for a full employment recovery.
Here, sluggish GDP is constraining employment growth. In this Washington Post graph, you can see how fast GDP needs to grow to take us back to pre-recession unemployment levels. With current GDP increases below 2.5%, we can see one cause of that tepid employment report.
And finally, you might want to see how your own state is faring. This Hamilton Project at the Brookings Institution graphic shows an uneven jobs recovery.
Our bottom line: Our sluggish recovery means we could continue underutilizing human capital during the next decade.
Sources and Resources: Always an excellent source of analysis and data, the Hamilton Project at the Brookings Institutions has their jobs interactive graphic here. And here are the Washington Post output gap projections.