Since April, the economy has averaged 275,000 new jobs per month (288,000 in June 2014), according to the Bureau of Labor Statistics. The unemployment rate is approaching 6 percent (6.1 percent in June 2014) and within the next year will likely be in the mid-5-percent range, low enough for the Federal Reserve to end some of its extraordinary stimulus measures on interest rates and asset purchases. Moreover, long-term unemployment has slowly fallen over the past 12 months (from 36.9 percent to 32.8 percent), and in June more than 80,000 people entered the workforce, reversing a trend during the recession and much of the recovery, of declining participation in the labor force.
But this recovering economy is not yet mirroring a healthy pre-recession economy either, say economists.
The economy has now recovered all of the millions of jobs lost in the recession. Both private payrolls and overall payrolls (including government) are now at record highs.
But that still leaves a significant shortfall in the labor market, considering that millions of people grew up into adulthood or immigrated to the U.S. and needed new jobs, says economist Harry Holzer at Georgetown University. “The fact that we’ve caught up with a number that existed six and a half years ago,” says Holzer, “when the population and the labor force have grown way beyond that point – we’re still in a jobs hole.”
Holzer also points out that a high proportion of the new jobs that have been created are in low-paid service industries, such as retail, hotels and restaurants. And a lot are temporary or part-time. Many of the jobs that were lost in the recession were better-paid—in manufacturing, construction, financial services.
Holzer does believe some well-paying middle-class jobs will come back—in business services and manufacturing and construction—if employers see the recovery is strong, steady and long-lived.
Darlene Miller is president of Permac Industries, a precision manufacturing firm outside Minneapolis that supplies a wide variety of industries, including transportation, medical, food, and avionics. The company laid off more than two dozen workers in the Recession. Now the payroll is back up to thirty employees. And there are several open positions—though Miller says she is having difficulty finding skilled, certified machinists to hire.
“I would say the economy is slowly progressing,” says Miller. “I wouldn’t say we’re back to pre-2009. But we are seeing improvement. I’m optimistic—optimistic with caution.”
Jeff Kravetz, investment manager at US Bank Wealth Management, says businesses are increasing their spending on capital equipment, and predicts hiring will also pick up. And he anticipates optimism among American consumers will return to pre-recession levels.
“They see that their portfolios have recovered, and their homes have come back in value significantly,” says Kravetz. “They feel wealthier, and that bodes well for a nice steady recovery.”
Kravetz also says the economy and financial system are on sounder footing than during the boom of the mid-2000s, when inflated home prices, over-leveraging and risky borrowing by consumers and corporations led the economy into catastrophe.