By John Gude
Wise people would probably respond to either of these questions with caution and with the objective of providing no real answer. Or at least no answer for which they might be held accountable. This recession has been a tough one for most businesses and many people, and as defined by a whole host of measures. After all, the Bureau of Labor Statistics (BLS) reported an unemployment rate of 10.2% for October, the highest such measurement in 26 years.
My gut tells me that this recession will be remembered a little differently than most of the others since World War II. This one will be remembered more for the pain that it has created for people–those who lost their jobs, those who couldn’t find any reasonable job, and those who just stopped looking. I also have come to feel that the effects of this recession have been internalized by a large segment of our population, and that all traditional socio-economic groups and geographies are well represented here.
This past July, I came across a Commentary by Susan Estrich that addressed the unemployment situation, and I was struck by the emotion that dwelled in her words. You can read it here, but listen her closing thoughts:
“The point is, I have always had a job, usually more than one, had no sympathy for those who couldn’t find one.
“I have never seen or lived through anything quite like this. There are no jobs for lawyers or laborers, for painters or waitresses, for secretaries or salespeople. There are literally no jobs to be had.”
Get my point?
It is now early December, and there are two, maybe three indications of better news. Last Friday (December 4), the BLS posted a news release to tell us that the unemployment rate had “edged down” to 10.0% from 10.2%. This is a very modest movement, but at least it is in the right direction.
But before the BLS released their report, the Institute for Supply Management (ISM) issued a report that could be much more telling. In the December 5 New York Times, Floyd Norris tells us that “The Jobless Rate May Have Hit Its Peak.”
Mr. Norris presents a very interesting analysis and commentary based largely on the release of one key economic indicator by the ISM. If this indicator is accurate, the unemployment rate for October will have been high rate for the business cycle. He points out that this indicator has proved to be reliable in all 10 previous recessions since World War II.
But look at this: Mr. Norris states that if other ISM data prove correct, the recovery from this recession will be very different from the “jobless” recoveries after the recessions of 1990-91 and 2001. In both instances, the unemployment rates rose for months after the official end of the recession.
As a part of their survey the ISM asks employers whether they would be adding to or reducing their workforce. The report showed that more companies were hiring than reducing employment in both October and November. In the past, Mr. Norris states, two such months of gains in the employment component always came after the recession was later determined to have ended, and after the unemployment rate had begun to decline, with only one exception.
So just maybe the jobless rate has peaked, and there could be something other than a “jobless” recovery to this recession. If so, this recession will be called the Recession of 2007-2009 and not the Recession of 2007-2010. And maybe the pain created by the unemployment associated with this recession will begin to fade.