The Daily Update: US Job Creation

According to Erica Groshen, the US’s former Bureau of Labour Statistics commissioner, job creation in America could take anywhere between five and eight years to get back to its 2019 trend. ‘We're just barely back up to the worst part of the 2007 recession’ Groshen said of the current rate of job growth, adding that it took about five years to return to pre-recession employment levels following the Great Recession. If the Covid-led recession and recovery follow a similar path, it will take an additional two to three years to get back on trend.

The disruption caused by the global pandemic has affected both what and how consumers buy goods and supply chains, as well as breaking ties between workers and employers, making it more difficult for those laid off to find new work. The employment of roughly 13 million Americans is currently being ‘disrupted’ by Covid-19 Groshen believes. Although this number has fallen significantly since last spring, further improvement will depend on whether the easing of Covid business controls and further government support outweigh recessionary forces.

Groshen said more stimulus is needed to ‘wake up’ the economy, including an infrastructure package pitched by the Biden administration to inject more confidence into the economy. ‘If we get that in place soon, then that will enter into people's expectations and help to avoid the recessionary spiral’ she said. It would also reel in ‘precautionary restraint’ as people see investments being made in things that will improve productivity and put people back to work. ‘If we're going to get this strong recessionary dynamic, if the structural changes coming about from the pandemic are really large, then you're really fighting for the long-term’ she added. ‘Then, countercyclical policy is really important and it's probably going to have to last for a long time’.