06 November 2015

Officially the Best First Half Decade of Job Creation in History

At 5%, unemployment is now exactly half of what it was exactly 6 years ago at the very peak of the Great Recession. That is cause for celebration. Additionally, today's strong number means that 2015 still could become the second best year in the last decade.

But it gets better.

During this last week, Congress finally agreed to a budget plan that will keep the government open for two more years. Next October, there will be no anxiety about whether this government that comprises roughly 20% of the economy might suddenly lurch to a stop. Further, defense and domestic spending alike are going to increase over the next couple of years. For the first time since the height of the Great Recession, the federal government will be stimulating rather than dampening the recovery. This alone could be good for an extra half a million jobs next year.

2016 is poised to be a record year for the decade. As previously mentioned, I think that we'll look back at 2010 to 2015 as the years in which the American economy recovered in terms of jobs created (it will be more than 13 million jobs created in the first five years); and 2016 to 2020 as the years in which the American economy recovered in terms of wage growth and household income. Now that unemployment is at 5.0% (it will drop below 5% before year end), the labor market will put steady upwards pressure on wages.

Not only does this month's jobs number mean that we're now at 61 months in row of uninterrupted job growth and counting, but it means this is easily the best first half a decade in history.

Jobs created in first half of decade
1980s 7.9 million
1990s 9.5 million
2000s 4.3 million
2010s 12.9 million (and with November and December's numbers, this is like to finish at  ~13.3)

Just to make sure you got that, this first half is roughly 9 million more jobs - about 3X - as many as last decade's first half and 3 million more than the 90s's first half.

Finally, a common rebuttal is "Yes, but the broader measure of unemployed is higher than this." That's true and it always is true. During the first year of the recovery, the narrow unemployment measures began to drop before the broader measure (which includes the discouraged workers and folks working part-time when they'd rather work full-time). But the gap between these two measures is beginning to narrow, coming closer to its pre-recession numbers, as you can see in this graph.

All that is good news.

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