In "The Growing Case for a Jobless Recovery," David Altig, senior vice-president and research director at the Atlanta Fed, casts a bucket of cold water over the observation reported here on Monday in "Why George Will Shouldn't Be Mocking The Stimulus," that a relatively high third-quarter GDP growth rate would be "inconsistent with a jobless recovery."
For starters, he observes that "the share of workers reporting that they have been involuntarily cut back to part-time is at a recorded high."
One potential implication of this fact is that firms probably have the capacity to expand production without hiring new workers (or increasing worker productivity). All these firms have to do is give more hours to existing workers, who have indicated they would be plenty eager to have them. Good for them -- and good for GDP growth -- but not much help on the employment front.
But far more troubling is the news that so-called permanent separations -- layoffs in which there is no expectation of ever getting rehired by the same employer -- are also at a recorded high.
Never, in the six recessions preceding the latest one, did permanent separations account for more than 45 percent of the unemployed. The current percentage stands at 56 percent as of September and appears to be still climbing:
In related news, new jobless claims for the week concluding on Oct. 17 rose by 11,000 from the previous week. The four-week moving average is still trending down -- but barely. All it would likely take is one more week of rising claims to get the four-week moving average moving back up again, and that does not bode well for October's nonfarm-labor report.
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