Is the recent talk of "green shoots" coming out of this recession realistic? A recent report from the New America Foundation outlines the strong likelihood of a jobless recession that "could perpetuate the crises in the housing and banking sectors and prevent a sustainable and healthy economic recovery." A jobless recovery will prevent the wage growth necessary to stimulate business investment, maintain consumption, and pay down debt.
The report outlines a constructed measure of effective employment: BLS's measurement of unemployed, 2.2 million marginally attached workers, and 9.1 million workers employed part time only because they can't find full time work plus another 4.4 million Americans who want to work but gave up the search over a year ago. This results in an 18.68% effective unemployment rate.
Other highlights from the report:
- The US economy must add 125,000 jobs per month just to keep pace with population growth.
- Employment growth is further hindered by continued productivity gains through this recession.
- As of Q1 2009, only 27% of employers experiencing mass layoffs anticipate rehiring some of the displaced workers.
- The most severe unemployement and job losses are occurring in sectors comprising the productive economy, precisely the sectors that must grow to shift from the debt-financed growth of the recent past to growth driven by production and consumption made possible by rising incomes.
- Mass unemployment is now fueling home foreclosures on prime mortgages: 5.7% of prime fixed-rate loans were overdue or in foreclosure last quarter, up from 3.2% a year earlier.