Between December 2007 — the official first month of the recession — and December 2009, the U.S. economy lost more than eight million jobs. Even if the economy creates jobs from now on at a pace equal to the fastest four years of the early 2000s expansion, we will not return to the December 2007 level of employment until March 2014. And, by the time we return to the number of jobs we had in December 2007, population growth will have increased the potential labor force by about 6.5 million jobs. If job growth matched the fastest four years in the most recent economic expansion, the economy would not catch up to the expanded labor force until April 2021. Even if job creation rates were as high as the fastest four years of the 1990s recovery, we would not return to pre-recession employment levels until September 2012, and we would not cover the increase in the potential labor force until September 2014.
Using the highest job creation rate in recent historical experience — the job growth rate achieved in the fastest two years of the economic expansions in the mid-1970s and the early 1980s — the economy would return to its December 2007 employment rate much sooner — by November 2011 — and would catch up to the expanded labor force by September or October 2012.
Unfortunately, according to the Congressional Budget Office’s (CBO) most recent projections, the path that the economy appears to be on now looks more like the mid-2000s expansion than earlier, more rapid periods of growth. Absent policy changes such as a major jobs bill, the CBO’s labor force and unemployment projections suggest that the economy will not return to December 2007 employment levels until June 2013, and will not cover the intervening growth in the potential labor force until August 2015.
John Schmitt is a Senior Economist at the Center for Economic and Policy Research in Washington, D.C. Tessa Conroy is a graduate student in economics at Colorado State University and a research intern at CEPR. This article was first published by CEPR in July 2010 under a Creative Commons license. See, also, Nancy E. Rose, “Lessons from the New Deal Public Employment Programs” (Monthly Review, October 2009).