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Economy

From Boom To Bust: The Year In Unemployment

Originally published on Wed December 28, 2011 6:32 pm

It may be hard to remember, but 2011 began with a bang on the jobs front. The White House seemed ready to break out the champagne when February's job growth report came out showing unemployment at the lowest in nearly two years.

But that celebratory mood didn't last long.

From start to finish in 2011, the biggest issue has been jobs. And as the year draws to a close, 25 million people report that they're either unemployed or underemployed. November's drop in unemployment provides some hope for a better job market in 2012, but a look back at 2011 shows how easily that hope can be crushed.

"We got into the middle of the year, and we had quite a slowdown," says Thomas Nardone of the Bureau of Labor Statistics.

That's when the unemployment rate rose from 8.8 percent in March to 9.2 percent in June. Then August's numbers came out, showing a big goose egg in payroll hiring: zero net new jobs created.

Analysts blamed eroding confidence among employers and consumers on the debt ceiling debate in Washington, and the growing debt crisis in Europe.

Back then, Wells Fargo economist John Silvia explained that the economy just wasn't producing at a pace that would actually lower unemployment. In fact, for the year as a whole, job growth was barely enough to absorb new entrants into the workforce. So while the unemployment rate did fluctuate slightly, Nardone says it was mostly stuck at about 9 percent.

"It's probably always a mistake to focus too much on one month's data and only one or two numbers that are coming out of the report," Nardone says. "It's a very big and very complicated job market."

Economist Gary Burtless of the Brookings Institution says he's not surprised by the year's sluggish recovery and disappointing job growth.

"I think it's very slow because so much wealth of American households was destroyed in the downturn," he says.

In other words, the biggest store of wealth for most Americans — home value — has yet to recover. And while stocks have rebounded, Burtless says Americans still have about $9 trillion less in wealth than they had before the recession began.

"It's very tough for people — especially those who've lost the most wealth — to feel confident in making big consumption decisions when they're so much poorer than they were four or five years ago," he says.

And that means fewer workers are needed to meet the demands of U.S. consumers. The poor job market has been especially difficult for the country's 5.7 million long-term unemployed workers.

David Supan is one of those workers. He's a construction project manager from Buffalo, N.Y., who specializes in building power plants.

"I have a lot ... more to give to a company who might wish to hire me," he says. "And, you know, a job comes up, you apply for it, you give them a little bit more information, and you never hear anything back again."

Burtless says the long-term unemployed face tough odds because most job openings are filled by people who already have a job or who have only recently become unemployed.

"Employers tend to be suspicious of people who've been out of work for a long time," he says.

November's drop in unemployment and some positive economic data point to job seekers having slightly better chances in 2012. But as we discovered in 2011, a few good months can quickly turn into disappointment. With the European debt crisis threatening U.S. growth, a similar scenario could play out in the new year.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

From start to finish, the U.S. economy limped through 2011. While the recession ended officially more than two years ago, 25 million people still say they're either underemployed or out of work entirely. November provided some hope that the job market will improve with the unemployment rate dropping sharply, but as NPR's John Ydstie reports, if the past year has taught us anything about the U.S. economy, it's that we shouldn't get our hopes up.

JOHN YDSTIE, BYLINE: It may be hard to remember, but 2011 began with a bang on the jobs front. When the report on February job growth was issued, the White House almost seemed ready to pop some corks.

PRESIDENT BARACK OBAMA: This morning we learned that the unemployment rate fell to its lowest level in nearly two years. Our economy added another 222,000 jobs in the private sector. That's the 12th straight month of private sector job growth.

YDSTIE: But that celebratory mood didn't last long. Here's Tom Nardone of the Bureau of Labor Statistics.

TOM NARDONE: We got into the middle of the year and we had quite a slowdown.

YDSTIE: Quite a slowdown, indeed. The unemployment rate rose from 8.8 percent to 9.2 percent and then, in August, a big goose egg in payroll hiring was initially reported, zero net new jobs created. Analysts blamed the debacle over the debt ceiling in Washington and the growing debt crisis in Europe for eroding confidence among employers and consumers.

Wells Fargo economist John Silvia summed it up this way back then.

JOHN SILVIA: The economy is not producing at a pace that really would lower the unemployment rate. It's not producing at a pace that we're absorbing a lot of young people or new entrants into the labor force. And it's very disappointing.

YDSTIE: For the year as a whole, job growth was barely enough to absorb the new entrants into the workforce, so the unemployment rate, while fluctuating slightly, was mostly stuck at about 9 percent, says Tom Nardone. That's despite the hope provided by February and the pessimism provided by August.

NARDONE: It's probably always a mistake to focus too much on one month's data and only one or two numbers that are coming out of the report. It's a very big and very complicated job market.

YDSTIE: What we did get, a sluggish recovery and disappointing job growth, is not surprising, says economist Gary Burtless of the Brookings Institution.

GARY BURTLESS: I think it's very slow because so much wealth of American households was destroyed in the downturn.

YDSTIE: Home values have not recovered and that's the biggest store of wealth for most Americans. Stocks have rebounded, but Burtless says Americans still have about $9 trillion less in wealth than they had before the recession began.

BURTLESS: And it's very tough for people, especially those who've lost the most wealth, to feel confident in making big consumption decisions when they're so much poorer than they were four or five years ago.

YDSTIE: That means fewer workers are needed to meet the demands of U.S. consumers. The poor job market is especially difficult for the 5.7 million long-term unemployed workers. David Supan, a construction project manager from Buffalo, who specializes in building power plants, is one of them.

DAVID SUPAN: I have a lot, I think, more to give to a company who might wish to hire me. And, you know, a job comes up, you apply for it and give them a little bit more information, and you never hear anything back again.

YDSTIE: Economist Burtless says the long-term unemployed face very tough odds because most job openings are filled by people who already have a job...

BURTLESS: Or who are only recently joined the ranks of the unemployed. Employers tend to be suspicious of people who've been out of work for a long time.

YDSTIE: Job seekers may have a slightly better chance in 2012. The November drop in the unemployment rate and some positive economic data are providing hope. But as we discovered in 2011, a few good months can turn into disappointment very quickly. With the European debt crisis threatening U.S. growth, a similar scenario could play out in the new year. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.