By John Cookson, CNN
With little fanfare, U.S. gross domestic product (GDP) has returned to where it was in the second quarter of 2008, before the worst downturn of the great recession. Annual GDP is back over $13.3 trillion (in 2005 dollars), according to new data from the Bureau of Economic Analysis. Overall, U.S. output increased by 2.5% in the third quarter of 2011, an uptick from 1.3% growth in the second quarter.
If economic output is back, why aren’t jobs? As Byron Auguste of McKinsey Global Institute explained in our GPS special Getting Back to Work, recent recessions are different. Each economic downturn has had a lag between when GDP recovers to pre-recession levels and when employment catches up. But as the chart above shows, for much of the last century this lag was about half a year. At most it was eight months. But something changed starting with the 1990 recession, which had a lag of 15 months, more than double the length of the 1981 recession. The 2001 recession took even longer to recover employment, more than doubling the duration of the 1990 recession.
The great recession lag has been longer still. At current job growth rates it will take five years for employment to recover. What explains this change? Globalization creating more competition for the U.S. workforce? Automation and technology raising productivity per worker while requiring fewer workers? Magic? Tell us what you think below.