Is this the new normal?

In July the private sector added 71,000 jobs.  That’s pretty pathetic, particularly considering that  just to keep pace with population growth the economy needs to add roughly 125,000 jobs every month.  On top of July’s disappointment, June’s private sector employment growth, originally estimated at a weak 83,000, was dramatically revised downward to a meager 31,000.

I don’t think anybody has a good explanation for where the jobs have gone.  The real question now is how much of this is cyclical and how much is structural.  Given that it’s now seven months after the end of the one of the steepest recessions we’ve ever seen (which should imply an equally dramatic recovery) and there’s virtually no job growth, I think structural forces are a bigger factor than most analysts or politicians have, to date, been willing to admit.  (For a good counter-example, see this post from Dave Altig at the Atlanta Fed, particularly the part at the end about how productivity gains during the recession reflect a skills mismatch within sectors.)

This probably isn’t what Tim Geithner had in mind when he (or, to be fair, the editors at the Times) titled his op-ed earlier this week “Welcome to the Recovery“.  But I think this should be our new worry; the bigger threat today isn’t that the recovery is stalling or delayed, it’s that this is the recovery, and it just didn’t bring any jobs with it.

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