The Tale of Two Recoveries

The Global Macro Monitor is running a series of charts this week analyzing the current jobs recovery.

Today we have a couple of background charts looking at the change in monthly nonfarm payroll employment from January 1999 to the most recent data of March 2012.

Chart 1 illustrates the depth of job losses during the period February 2008 to February 2010 relative to the last jobs recession during 2001-03.  The maximum monthly loss in payroll employment during 2001-2003, for example, was only 331K versus 818K during the financial crisis.

Total job losses in the two recessions are then juxtaposed in Chart 2.  Note that more than 3x more jobs were lost in 2008-10 than in 2001-03.

We compare the two recoveries by change in nonfarm employment in each major industry.   Chart 3 looks at the first 25 months of the last job recovery — September 2003 to September 2005 – and compares it to the current 25-month recovery, which began in March 2010.

Interestingly, both recoveries – 25 months in — created almost the same amount private sector jobs, 4.13 million versus 4.05 million, respectively.   The 2003-05 economy had recovered all the jobs it had lost in just 17 months  and created an additional 3.8 million jobs as job creation continued though January 2008.   The current recovery has regained only about 41 percent of jobs lost in 2008-10.

The composition of jobs created in this recovery versus the last differs in many industries and reflects the structural changes which are taking place in the economy.   Employment growth in professional services, education and healthcare, and leisure and hospitality is tracking the last recovery and are still large job creators.

Manufacturing jobs are rebounding in this recovery, which is the opposite of what happened in the first 25 months of the 2003 recovery, which experienced job losses.   No celebration yet, however, as only a fraction of the 2 million manufacturing jobs lost during 2008-10 have been recovered.  Nevertheless, the bleeding has stopped and hiring is moving in the right direction.

Construction has recovered only 22K  of the almost 2 million jobs lost in 2008-10.  Again, this is at odds with the 2003 recovery that was led by a monetary induced housing bubble which created many construction and other jobs affiliated with real estate.   We recall reading one stat that one in every two jobs created in California during the last recovery was housing related.  This explains why California has one of the highest unemployment rates in the country.

Finally, note the sharp drop in government jobs during this recovery.  We need to drill down further, but we suspect these are layoffs at state and local governments and postal workers at the federal level.  We looked at this a few months ago and found that federal government jobs, excluding the post office, had increased.

We’ll have more tomorrow.   Stay tuned.

Click on charts to enlarge and for better resolution.

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