What is a jobless recovery, and are we having one?
Fed chair Ben Bernanke’s testimony today referred to a jobless recovery. First, he talked about an exit strategy, or how the Fed will undo some things to combat the recession, namely taking money out of circulation.
Bernanke also suggested we may not see a peak in unemployment until 2011. But the weekly leading economic indicators do not show the recession continuing deeper. Soon, he expects industrial production and retail sales will begin to rise, but we won’t see a lot of job growth like we did in other recessions.
Actual job losses will slow as the recession draws to a close this summer. We will start to see job growth in the services sector, but probably not the manufacturing sector. In fact, in the last 10 years, we’ve lost 1/3 of US manufacturing jobs, and they won’t come back.
Our economy is becoming more of a service economy. In other words, fewer people are needed to produce the same number of goods. So, we’ll climb out of recession, but the jobs won’t return.