Jobless Recovery

A jobless recovery...a thing you would think (and hope) is a paradox. But it’s not.

A jobless recovery is what it sounds like: an economy recovers from a recession, but is “jobless”...i.e. the unemployment rate hasn’t dropped in tandem with rising GDP.

This can put policymakers and organizations like the Fed in a pickle, since a lot of the tools they use to tinker with the economy is based on these general ideas (assumptions, really): that when the economy bounces back, so does employment.

When the housing bubble burst in ‘07-’08, causing a recession, it suffered from jobless recovery. From GDP standards, the recession was officially over, but unemployment was still high, and it remained high for months afterwards.

Why does jobless recovery happen? Could be many reasons, but in our modern times, jobless recovery seems to be happening to a larger degree. Some postulate that firms learned to do more with less in a recession, are careful about hiring (re: adding costs), and find ways to automate jobs to cut costs...but also to cut jobs. In other words: robots take people’s jobs in recessions, and they keep them afterward.

They’re coming, people. They’re coming (maybe).