U.S.: The Jobless Recovery: Kiss It Good-Bye

After two long years, the recovery from the 2001 recession is no longer jobless. The Labor Dept. says payrolls have risen for three consecutive months, although at a pace well below that of a typical recovery. What everyone from job seekers to investors to Washington pols wants to know is: Will job growth pick up enough in 2004 to cut unemployment and keep consumers spending? After all, companies have become adept at lifting the output of their existing workers, causing productivity to soar in recent quarters.

Rest easy. More jobs are on the way, and the reason lies in the normal ebb and flow of the business cycle. First of all, demand is accelerating. Over the past four quarters, demand has grown 3.8%, up from 2.5% a year ago and from 0.9% two years ago. Faced with unexpectedly strong demand this summer, businesses had to fatten payrolls by 125,000 in September and 126,000 in October. Better yet, several key indicators point to further job gains.