Brad DeLong says that a return to growth is right around the corner and it’s going to suck:
But it will not feel much like a recovery. After the 1982 recession the turnaround in employment lagged the turnaround in GDP by only six months. Thereafter employment growth was very strong: in the eighteen months up until the end of 1984, growth in work hours averaged 4.8% per year. it took only 7 months after the 1982 recession trough for the employment-to-population ratio to rise above its trough level (1980: 2 months. 1975: 5 months. 1970: 18 months. 1961: 13 months. 1958: 4 months. 1954: 8 months.) By contrast, it took 29 months after the 1991 recession trough for the employment-to-population ratio to exceed its trough level, and 55 months after the 2001 recession trough for the employment-to-population ratio to do so. Productivity growth in the immediate aftermath of the end of the 1991 and 2001 recessions was surprisingly rapid: rapid enough to eat up all of real demand growth and more as businesses decided to take advantage of the economic downturn to slim down their labor forces and become more efficient.
Today–unless we get much faster real GDP growth than currently looks to be in the cards–we are headed for a jobless recovery. The answer to the economic question–was the stimulus sufficient to rapidly return the economy to something like normal unemployment?–is likely to be: “h— no, it was much too small…”
Note, however, that productivity growth and GDP growth absent employment growth tends to depress wages and therefore boost corporate profits. That, in turn, should boost financial markets. And thus to a Dow-obsessed and elite-dominated media culture, all will appear to be going well.