Today, March 9, 2011, marks the two-year anniversary of the stock market bottom following the credit crisis of 2008. The official bottom of the recession (per NBER, an ad hoc group of economists that officially determines the peaks and troughs of recessions) occurred a mere three months later in June 2009.
Following the official end to the Great Recession, official reports indicated that jobs continued to be lost at a rapid pace, though the bottom roughly coincided with the point where the number of job losses each month began to decline. Thus, the “improvement” in the job market was simply a slower decline in overall employment for several quarters. The brutality of the Great Recession is perhaps best marked by the fact that it has taken all the way to late 2010 and early 2011 to FINALLY see what appears to be a sustainable trend in an actual INCREASE in jobs and employment. In addition, the positive employment figures the past few months are likely understated due to statistical smoothing efforts where the officials in charge of determining these numbers make guesses as to the number of new small businesses gained or lost each month. While these numbers get corrected long after the fact for actual jobs gained or lost, the most recent numbers tend to overstate actual job growth at the peak of economic expansions and understate them in the early stages of employment recovery.
Healthy levels of employment are critical to sustainable economic growth. Given the dramatic scope of job losses the past few years, we have a lot to make up for and don’t expect to return to ideal employment levels for several years. That said, the recent trend in job growth, if not derailed by excessive commodity prices, geopolitical disturbances, fresh credit concerns, or an unforeseen catalyst, should go a long way to building a solid foundation for continued economic growth.