The jobless recovery (new normal?)

30 Dec

From Mark Perry:

The current state of the US economy explained in one chart


The chart above helps to explain some of the more interesting and important details of the current state of the US economy:

1. As of the third quarter of this year, the US is producing 5.6% more output (real GDP) than in the fourth quarter of 2007 when the Great Recession started (see blue line in chart).

2. While the US economy was able to achieve a complete recovery from the Great Recession in terms of real GDP, and is now producing $843 billion more output than in Q4 2007, the new record level of economic output in the US is being produced with two million fewer workers than in the last quarter of 2007 (see red line in chart).

3. The fact that the US economy is producing 5.6% more output now than in 2007 with 2 million fewer workers would explain why corporate profits are at record levels and more than 40% above the pre-recession peak (not adjusted for inflation).

4. The chart above also illustrates the fact that the US economy is in another “jobless recovery,” with a full economic recovery when measured by real output, but with a weak recovery when measured by employment levels, with a stubbornly high jobless rate and sluggish job growth.

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