View Full Version : Obama CBO throws cold water on happy recovery talk

02-16-2012, 06:12 PM
One step forward, two steps back.


“The rate of unemployment in the United States has exceeded 8 percent since February 2009, making the past three years the longest stretch of high unemployment in this country since the Great Depression. Moreover, the Congressional Budget Office (CBO) projects that the unemployment rate will remain above 8 percent until 2014.

The official unemployment rate excludes those individuals who would like to work but have not searched for a job in the past four weeks as well as those who are working part-time but would prefer full-time work; if those people were counted among the unemployed, the unemployment rate in January 2012 would have been about 15 percent. Compounding the problem of high unemployment, the share of unemployed people looking for work for more than six months—referred to as the long-term unemployed—topped 40 percent in December 2009 for the first time since 1948, when such data began to be collected; it has remained above that level ever since.”

02-16-2012, 06:22 PM
Yes and no. I think you are confusing "recovery" with a fall in the unemployment rate. The past few years have shown that to be incorrect, as until recently the unemployment rate had been falling with no real underlying recovery just because people were leaving the labor force.

Just as the unemployment rate can fall without a recovery, we can see a recovery without a fall in the unemployment rate (or even an increase) if a bout of new hiring prompts more people to reenter the labor force.

What really matters is the employment-population ratio, ie the share of the population that is employed:


We'll know if this is a real recovery if the recent uptick continues or if it fizzles out like previous ones have.