Yes, US unemployment is declining. Yes, US economy is adding jobs. Yes, the crisis is… almost over… Except…
Except that is:
- Average duration of unemployment rose in October (the latest we have data for) and
- Average duration of unemployment remains totally out of touch with previous recessions.
Now, note the following regularity:
- After 2001 recession, average duration of unemployment never returned to pre-recession levels;
- The same has happened in the recession of 1990-1991.
In other words, so far in all three most recent recessions there was a permanent increase in unemployment duration over and above pre-recessionary average.
Every time this happens in the economy the following takes place: some of those who were long term unemployed during the recession become permanently unemployed. And every time this happens, the jobs being created in a recovery are by-passing those who have been long-term unemployed.
Now look back at the current crisis running stats. Average time it took unemployment duration to fall back to pre-crisis levels in all previous recessions is 61 months. We are now into 77th month of unemployment duration staying above pre-recessionary levels. And counting. By length of the crisis to-date, this is the third worst recession in post-war history.
We are also at the duration levels vastly in excess of those recorded in all previous recessions. By this matrix, the US is in its worst recession in post-war history.
Here is the raw data:
While the US economy might be generating jobs, it is not generating enough of the jobs to shift the long-term unemployed, and it is not generating the types of jobs that can get this massive army of people forced to rely on unemployment benefits back into productive employment.