As I have pointed out in past posts, the ratio of total non-farm payrolls to the civilian non-institutional population serves as a very accurate general indicator of macroeconomic contraction and expansion.Looking at the chart (click for dynamic version) you can see that peaks and troughs in this series correlate very well with the NBERs determinations of the beginning and ending of past recessions while the peak year-over-year decline has always occurred just after the end of recessionary contraction.
Looking at the latest trend in this series it’s plain to see that we are likely beyond (at least in a technical sense) the latest recession which this indicator suggests ended sometime between Q2 and Q3 2009.
If future macro trends were to follow along even roughly what has been experienced in the past, then we should be coming into some form of sustained workforce recovery.
On the other hand, it’s important to note that while the 2000s “expansion” was sustained (trough of late 2003 to peak of 2007), it was so weak as to constitute an almost entirely futile trend in the midst of a far larger and fiercely negative downward slide that started in 2000.
With the severe and worsening bout of long term unemployment, the question now is, are we on the cusp of a meaningful workforce recovery OR are we simply going to see more evidence of a structural deterioration of the labor market?
