When it comes to recessions, the U.S. economy isn’t bouncing back quickly. And there’s little prospect for any near-term spring in the steps of job creation in the construction industry, along with those in finance and state and local governments.
So says a report last month by The Conference Board, a global, independent business membership and research association, which found that no job sector has been nearly as hard-hit as construction during the Great Recession. And based on historical trends over the last 50 years, hiring in construction and in other sectors has shown little proclivity to come back quickly after recessions.
“When looking across industries, the current recovery is showing some unique trends,” says Gad Levanon, Associate Director of Macroeconomic Research at The Conference Board, and author of the report. “For example, employment in construction, finance and state/local government is not only declining, but declining much faster than in any other recovery since 1960. The decline in these industries is a result of forces that go beyond the ups and downs we see in typical recessions, and a strong bounce back is unlikely in the near future.”
Since the 18-month recession “ended” in June 2009, the entire U.S. economy has added only 1.3 million jobs, making it an extremely weak recovery.
But since that time the number of jobs in construction (-8.1 percent), finance (-1.8 percent), and state and local government (-1.0 and -2.6 percent respectively) have continued to decline.
The current recovery is the second slowest on record since 1961 – continuing a trend that began in 1991 of post-recession weak growth in both jobs and Gross Domestic Product. In the last three recoveries, neither GDP nor employment “roared back” as was typical after earlier downturns, The Conference Board said.
In the near-term, employment growth “will continue to be slow,” The Conference Board said. Overall unemployment is likely to remain above 8 percent through 2012. The Conference Board forecasts GDP to grow at about 2.5 percent in 2011 and 2012, much lower than the rate of 3.5 to 4 percent typically reached during expansions.
Adds Levanon: “Longer-term prospects are more promising, however. In the last six months, employment outside of construction, finance and state and local government has already been growing faster than nearly any other six-month period in the last decade. Once constraints in these hard-hit sectors loosen, overall job recovery is likely to pick up pace.”