Unemployment won’t ease to 4.5 or 5 percent for 10 years, according to Lakshman Achuthan, managing director of the Economic Cycle Research Institute, and James Glassman, senior economist at JPMorgan Chase & Co.
“That requires that we have enough growth to get unemployment down about half a point a year, which I think is not unreasonable,” said Glassman, a former Federal Reserve economist, in a radio interview today on “Bloomberg Surveillance” with Tom Keene. “But I don’t think you can expect much better than that.”
Companies in the U.S. added more jobs than forecast in August, indicating the world’s largest economy was sustaining a yearlong recovery. Private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today.
The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000. Overall employment fell 54,000 for a second month and the unemployment rate rose to 9.6 percent as more people entered the labor force.
While 9.6 percent unemployment is an improvement from the 10.1 percent unemployment peak in October 2009, the report doesn’t end concerns about a return to recession, said Achuthan, who is co-author of a 2004 book, “Beating the Business Cycle.”
“I don’t know that this is a game changer,” he said. “We still have leading indicators that have gone flat.”
Alan Krueger, the Treasury Department’s chief economist, said the U.S. has a “long way to go” before the economy is strong enough to generate a sufficient number of jobs to bring the unemployment rate down. Achuthan echoed Mohamed A. El-Erian, chief executive officer at Pacific Investment Management Co., who has said labor markets are undergoing structural shifts.
“We are in a real recovery, as disappointing as it may be to the people who remain unemployed,” Achuthan said.