Yesterday, upon the stair,
I met a man who wasn’t there
He wasn’t there again today
I wish, I wish he’d go away…
From Antigonish by Hughes Mearns (1899)
Scott Sumner has a divergent explanation for the jobless recovery—there isn’t a recovery at all:
Where’s the evidence of a recent trend toward jobless recoveries? What I see isn’t jobless recoveries, but three consecutive recessions where the first 6 quarters saw no recovery at all (relative to trend.) We fell into three deep holes, and started digging sideways.
So yes, the last three recessions have been quite different, but the difference was that during the first 6 quarters of “recovery” there was no recovery at all. And 1983 is not an outlier. We can’t do 1980, because the entire recovery lasted much less than 6 quarters, but previous postwar recessions saw RGDP rise at 5% to 10% rates during the first 6 quarters of recovery.
The real question is why did RGDP rise so slowly during the three most recent recoveries. If you haven’t guessed yet, you’re obviously new to my blog.
There’s no jobless recovery, there’s a jobless lack of recovery, or more accurately a M*V-less lack of recovery.
He continues on for several paragraphs and then closes with something to contemplate:
Perhaps inflation targeting (rather than level targeting) also plays a role. Price level targeting leads to V-shaped recoveries and inflation targeting leads to L-shaped “recoveries.”