Why the US economy is taking so long to recover

Published on NewsOK Modified: May 4, 2013 at 12:29 pm •  Published: May 4, 2013
Advertisement
;

WASHINGTON (AP) — The American economy and job market are moving in the right direction, just not very quickly.

The news Friday that U.S. employers added a solid 165,000 jobs in April and unemployment fell to a four-year low of 7.5 percent came as a relief.

The Dow Jones industrial average surged 142 points, or 1 percent, on the news to close at a record 14,973. The better-than-expected April numbers erased worries that the U.S. economy was stalling for the fourth year in a row — a fear that had emerged after a disappointing jobs report for March. Friday's report also showed job growth in March and February was stronger than first estimated.

Nearly four years after a devastating recession, the U.S. economy and job market are far from a full recovery, but they have made steady progress. Here is an overview of America's economic health:

—HIRING: PICKING UP BUT FACING A LONG SLOG

The U.S. economy has been adding 196,000 jobs a month this year, up from a monthly average of 179,000 in 2011 and 2012. Given how far it needs to go, the job market is recovering more slowly than people had hoped. The U.S. still has 2.6 million fewer jobs than it had when the Great Recession began in December 2007. At the current pace of hiring, total U.S. jobs won't reach the pre-recession level of 138 million for more than another year.

Account for population growth, and the jobs ditch is even deeper: Heidi Shierholz, an economist at the liberal Economic Policy Institute, says the economy needs to add 8.6 million jobs, not 2.6 million, to keep up with a rising population.

—UNEMPLOYMENT: FALLING — BUT STILL HIGH

Unemployment has improved dramatically since peaking at 10 percent in October 2009. But by any normal standard, April's 7.5 percent unemployment was still a recession-level figure — higher, for example, than it ever got in the short recession of 2001. The Federal Reserve doesn't expect the unemployment rate to reach a healthy level — 6 percent or lower — any sooner than 2015.

At least unemployment fell last month from 7.6 percent in March for the right reasons: More Americans reported having jobs and fewer reported being unemployed.

A big part of the drop in unemployment the past 3 ½ years has come because people have given up looking for work. Only 63.3 percent of working-age Americans were working or looking for work last month and in March. That is the lowest "labor force participation rate" since May 1979. People without a job who stop looking for one are no longer counted as unemployed. If the participation rate were at the pre-recession level of 66 percent, the unemployment rate could have reached 11.3 percent last month.

—THE ECONOMY: GROWING SLOWLY

The economic recovery from the Great Recession is the slowest since World War II. Growth has been hobbled by lingering damage from a housing bust and financial crisis. The economy expanded just 2.4 percent in 2010, 1.8 percent in 2011 and 2.2 percent in 2012. It grew at an annual pace of 2.5 percent in the January-March quarter this year.

| |

Advertisement


Trending Now



AROUND THE WEB

  1. 1
    Hotel leaves Oklahoma City Thunder opponents telling ghost stories
  2. 2
    Check out the Thunder postseason playlist
  3. 3
    VIDEO: Blake Griffin dumps water on a fan
  4. 4
    Oklahoma City Thunder: Grizzlies guard Nick Calathes calls drug suspension unfair
  5. 5
    Dave Chappelle Reveals Shockingly Buff New Look
+ show more