Monday, July 9, 2012

How Many Jobs Needed to Catch Up

Welcome to the Recover ... Eh

By Matthew O'Brien
Jul 6 2012, 11:27 AM ET 9 Do you like good news? If you do, this wasn't your month. Next month isn't looking good either.

After a disappointing past few months, June wasn't any better with 80,000 new workers.  To put that in perspective, the economy needs to add roughly 125,000 jobs a month just to keep pace with the growing population. We're sliding backwards off the economic treadmill, even though the headline unemployment rate was unchanged at 8.2 percent. 

This isn't a blip. This is the way things are. And the more we zoom out, the worse things look. The second quarter of 2012 has been the worst quarter for job growth in two years. To quantify that, the economy added an average of 75,000 jobs a month in the second quarter -- compared with an average of 226,000 jobs a month in the first quarter.

At this rate, unemployment will come down to pre-recession levels approximately never. You can't even put numbers this bad into the Hamilton Project's jobs calculator -- which shows that we'd need to add 208,000 jobs a month to fully recover by 2020. Try it.

In other words, the economy needs more help. But with Congressional Republicans unwilling to negotiate on any kind of stimulus, that leaves the Fed as the only game in town. Ben Bernanke has hinted that the Fed might do more if more bad data came in. Well, this is bad data.

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