Jobless Economic Recovery in 2009-2010 a Reality?

Are we Headed towards a Jobless Economic Recovery in 2009-2010?

By Mike Rowan, mike@erollover.com

There is a new term that is popping up in the news. A jobless economic recovery is quickly becoming a new catch phrase that is being used by the talking heads in the media.

Economic Recoveries are usually a good thing. However, this is not necessarily the case with a jobless recovery. A jobless recovery, would literally be where corporations right the ship from an earnings perspective, but fail to put a priority on hiring due to capital restraints. As a result, corporate conditions would improve, but the number of people without work would still be painful.

According to Wikipedia, “A jobless recovery or jobless growth is a phrase used by economists to describe the recovery from a recession which does not produce strong growth in employment. The phrase originated in the early 1990s in the United States, to describe the economic recovery at the end of President George H.W. Bush's term; it came back into use during the early 2000s.

Prior to the 1990s, most economic recoveries led to employment increases relatively rapidly. However, starting with the 1991 recession the employment recoveries have been historically slow.”

Jobless Claims Showing Unemployment Trending Down

Last year, at this time, the economy was starting to unravel at a rapid pace. However, some recent unemployment numbers may provide evidence that the accelerating job losses may be trying to stop the bleeding.

The number of U.S. workers filing new claims for unemployment benefits rose slightly more than expected last week, but the number of workers staying on jobless roles fell to the lowest in three months, government data showed on Thursday.

Initial claims for state unemployment insurance benefits rose 25,000 to a seasonally adjusted 584,000 in the week ended July 25, the Labor Department said, a touch above market expectations for a reading of 570,000.

However, the four-week moving average for new claims, considered to be a better gauge of underlying trends as it irons out week-to-week volatility, fell by 8,250 to 559,000.

This was the lowest level since late January.

Is the Economy Set to Recover in the Last Quarter of 2009?

The weekly moving average has declined for five straight weeks. The trend in unemployment claims was now back to where it would have been without July distortions caused by the timing of auto plant shutdowns.

Continuing claims—the number of people staying on the benefit rolls after collecting an initial week of aid—fell by 54,000 to 6.20 million in the week ended July 18, the latest week for which the data is available.

Overall Economic Data Still Poor

We have been given a silver lining with regards to some of the recent economic data. However, we should be cautious because this is still a case of “not as bad as we expected” as opposed to “New Strong Economic Data”. As a result, I would keep a weary eye on my retirement assets, and pray that this isn’t going to be a prolonged period of misery.