Steve Blitz Morning Notes

The growing noise about a jobless recovery is old news -- recoveries have been increasingly jobless, especially the last two. The important question is why. As for giving evidence of the jobless upturns, I am reproducing a table from my July 9 blog showing the steady increase in the number of months until total employment gets back to the pre-recession peak (see below). Because population grows, the table is somewhat misleading -- a rate relative to the number of people in the labor force is a better indicator. The chart below does that with the number of weeks it takes to get from the insured unemployment rate peak to the previous cycle low. Here too we see the lengthening in time.

As for the why, the increasing amount of off shore labor used to supply domestic demand has something to do with it. Given the increased skew in the distribution of income, low consumption at the lower end of the income scale (those workers most affected by the shift in production activity) barely impacts the overall numbers. Getting out of this box will not be quick, but if the Treasury and the Fed are determined to end the strong dollar policy and perhaps offer a tax credit to firms hiring low wage workers, the economy might begin to get that recovery led by import substitution and increased exports. We can only hope.