The Wall Street Journal today reports the U.S. job market may bounce back quicker than in past recessions. That’s because, unlike the 1990-91 and 2001 downturns, a big chunk of job losses have come from the service-related industries that now lead U.S. employment.
Firms were unusually aggressive in cutting costs and cutting employment. The flip side of that remains to be seen, but it could mean that companies will be quicker to bring back people because they were more aggressive about getting rid of them. – James O’Sullivan, an economist with UBS
Comerica Bank economist Dana Johnson told the WSJ jobs could rebound quicker because it looks like the economy will also bounce back as it recovers, but an article from Forbes isn’t as optimistic.
Forbes says high unemployment could hinder recovery for consumption, credit and housing. Forbes considers the jobless recovery after the 2001 economic slump a good indicator that there could be another one following this recession. The article says this could be more likely because of companies’ tendency to cut back employees’ hours and rely more on part-time workers.
The U.S. unemployment rate has already risen to a level that is reminiscent of that in the 1981-’82 economic recession, and is likely to move higher and remain in double digits throughout 2010. This will prevent a rapid economic rebound, and is likely to heighten calls for a second fiscal stimulus package. – Forbes
Reuters reports similar jobless recovery findings, but also points out some good news for Midwesterners. The article says nine Midwest and South-Central states showed economic growth for the first time in almost a year.
Readings over the past several months indicate that the regional economy is on the mend. I expect the nine-state region to record positive growth, but with little or no job additions for the rest of 2009. – Creighton University Economics Professor Ernie Goss