debating the jobless recovery

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    Stephen Roach and Richard Berner (New York)

    There’s never been anything like it. The US economy is currently in the midst of the most profound hiring shortfall of any modern-day business cycle. Fully 25 months since the economy technically bottomed in November 2001, private nonfarm payrolls are 7.7 million workers below the typical hiring trajectory. Employment is even tracking 2.4 million workers below the employment profile of the upturn of the early 1990s — heretofore America’s worst jobless recovery.

    Debate has long been a hallmark of Morgan Stanley’s macro research culture. True to form, over most of the past several months, we — Steve Roach and Dick Berner — have taken opposing sides of the debate over this critical macro issue. Yet, perhaps surprisingly to our readers, we do share common ground on several crucial aspects of this issue. The job conundrum is obviously central to the debate over the US and global economic prognosis. In our view, there can be little dispute that if this trend continues, recovery in the US economy — to say nothing of recovery in a US-centric global economy — could well be in serious trouble. Nor can there be any doubt of the ominous policy and political implications of a lingering jobless recovery. The key question: Will it continue?

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