It will take at least until 2015 for the U.S. jobless rate to drop to 6 percent if the labor force and employment keep growing at the current pace.
The CHART OF THE DAY shows the projected path of unemployment assuming monthly payroll gains match the 124,167 increase averaged over the past 12 months and the labor force expands as it’s done since January 2010.
“If anything, the estimate of when we would return to the target unemployment rate is optimistic,” said Patrick O’Keefe, chief of economic research at JH Cohn LLP in Roseland, New Jersey, and a former deputy assistant secretary at the Labor Department. “This jobs recovery is so weak that it will take years before we get back to an unemployment rate that, prior to the recession, would have been considered high.”
The departure from the workforce of discouraged workers, who have stopped looking for a job and are therefore no longer considered unemployed, is helping depress joblessness. The labor force has grown 0.4 percent over the past 20 months.
By contrast, the Congressional Budget Office forecasts the labor force will climb 0.9 percent a year through 2014. At that rate, and with payroll growth holding at the pace of the last year, it will be 2025 before unemployment reached 6 percent.
The unemployment rate has remained above 8 percent since February 2009, the longest such stretch since record-keeping began in 1948. The proportion of the labor force either working or actively looking for work was 64.2 percent in September, close to July’s 63.9 percent, which was the lowest since 1984.
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