Lost Decade Won’t be Shangri La

Inquiring minds are gazing at the graph above that Ezra Klein posted from Brookings yesterday. It tells very bluntly that the US is looking at a lost decade similar to what Japan experienced after their recession and subsequent spending spree:

If the economy adds about 208,000 jobs per month, the average monthly rate for the best year of job creation in the 2000s, then it will take until November 2022 to close the job gap. At a more optimistic rate of 321,000 jobs per month, the average monthly rate for the best year of the 1990s, the economy will reach pre-recession employment levels by January 2016.

A slightly different way to look at it is to take the single best year from the previous ten and assume we can maintain that rate or better for 11 years for a full recovery.

The best-case scenario (the scenario described in the previous paragraph) on the graph (the red-dashed line) assumes we take the single best month of the entire 2000s and maintaing that level of growth for 2 1/2 years. If you’re thinking that’s extremely unlikely, you’d be right.

Reality is that we might not even reach the minimum threshold (blue-dashed line) this year. And even if that happens, those numbers will continue unabated for 11 years.

Pretty much an impossibility.

Another stark graph was the employment graph for the previous decade:

Workers suffered the sharp pangs of a sinking economy in the first decade of the 21st century. Since 2000, we have experienced two severe recessions that battered the incomes of and employment opportunities for American workers (the recession of March 2001-November 2001 and the Great Recession of December 2007-June 2009). The effect of these recessions is shown in the chart below:

These two graphs really begin to communicate the pain that this country has been living with.

The more the government regulates, the more the ecomony will continue to cough and sputter while trending down.


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