Job Losses Related to Post-War Recessions

Job losses appear to have bottomed out thanks to the creation of 162,000 net new payroll jobs last month including 123,000 in the private sector. Moreover, January and February data were revised higher by a combined 62,000. But it will take a long time to regain the 8.4 million jobs lost in 2008 and 2009. The last three recessions – 1981-82, 1990-91 and 2001 – were followed by progressively longer recovery periods before employment returned to neutral. Measured from the beginning of the recession, the labor market required 28 months to recoup its losses after the 1981-82 recession. The convalescent periods from the 1990-91 and 2001 recessions lasted for 32 and 48 months, respectively. In the current cycle, total payroll employment did not hit bottom until December 2009, 24 months after the losses began, and it is unlikely to return to equilibrium for at least another three years. This recovery span understates the pain because the labor market needs to generate 100,000 to 125,000 net new jobs per month to accommodate the growing labor force, which is why the unemployment rate, currently 9.7 percent, will decline painfully slowly even as employers begin to hire again. Nevertheless, the 162,000 new jobs in March are a welcome change and suggest that the labor market is finally headed in the right direction. Renewed hiring will boost commercial real estate leasing activity in the second half of 2010 with vacancy rates expected to peak by year-end.  Source: U.S. Bureau of Labor Statistics, Grubb & Ellis