Economic Notes: Baby Steps to Recovery
12/08/2009
By Patrick O'Keefe, Director of Economic Research, J.H. Cohn
At the outset of a marathon, with all of the competitors in a pack, most runners are tentative – taking baby steps to avoid a stumble and injury. You can’t win a marathon at the start; but you can lose it on a misstep. Why risk the long-run goal in a premature sprint to the front of the pack?
Recovery from the most severe downturn in decades will require a marathoner’s perspective.
Employment registered its smallest monthly decline since the recession began, according to the Bureau of Labor Statistics (BLS). November saw continued job losses in the goods-producing sectors (manufacturing and construction) largely offset by gains in health care and temporary help.
Concurrently, the number of jobseekers fell by 325,000 and the unemployment rate pulled back to 10%.
While one month is not a trend, the BLS report hints at a firming in the nation’s labor markets. For example, over half of the drop in unemployment was attributable to the recall of workers on temporary layoffs. Further, among the unemployed, the number of job losers fell by 4.4%; while among the employed, the number working part time due to economic conditions plateaued.
The November jobs report reflects the tenuous condition of the general economy. Although employers are no longer slashing payrolls, neither are they hiring vigorously. Instead, they are taking baby steps – increasing hours, recalling furloughed workers, and contracting for temporary help. It’s too early, and conditions are too uncertain, to justify anything more than tentative steps forward.
Baby steps to be sure. But they are the first steps in a marathon whose finish line is not yet in sight.
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