From Boom To Bust: The Year In Unemployment
It may be hard to remember, but 2011 began with a bang on the jobs front. The White House seemed ready to break out the champagne when February's job growth report came out showing unemployment at the lowest in nearly two years.
But that celebratory mood didn't last long.
From start to finish in 2011, the biggest issue has been jobs and as the year draws to a close, 25 million people report that they're either unemployed or underemployed. November's drop in unemployment provides some hope for a better job market in 2012, but a look back at 2011 shows how easily that hope can be crushed.
"We got into the middle of the year and we had quite a slowdown," says Thomas Nardone of the Bureau of Labor Statistics.
Analysts blamed eroding confidence among employers and consumers on the debt ceiling debate in Washington and the growing debt crisis in Europe.
Back then, Wells Fargo economist John Silvia explained that the economy just wasn't producing at a pace that would actually lower unemployment. In fact, for the year as a whole, job growth was barely enough to absorb new entrants into the work force. So while the unemployment rate did fluctuate slightly, Nardone says it was mostly stuck at about 9 percent.
"It's probably always a mistake to focus too much on one month's data and only one or two numbers that are coming out of the report," Nardone says. "It's a very big and very complicated job market."
Economist Gary Burtless of the Brookings Institution says he's not surprised by the year's sluggish recovery and disappointing job growth.
"I think it's very slow because so much wealth of American households was destroyed in the downturn," he says.
In other words, the biggest store of wealth for most Americans — home value — has yet to recover. And while stocks have rebounded, Burtless says Americans still have about $9 trillion less in wealth than they had before the recession began.
"It's very tough for people — especially those who've lost the most wealth — to feel confident in making big consumption decisions when they're so much poorer than they were four or five years ago," he says.
And that means fewer workers are needed to meet the demands of U.S. consumers. The poor job market has been especially difficult for the country's 5.7 million long-term unemployed workers.
David Supan is one of those workers. He's a construction project manager from Buffalo, N.Y., who specializes in building power plants.
"I have a lot ... more to give to a company who might wish to hire me," he says. "And, you know, a job comes up, you apply for it, you give them a little bit more information and you never hear anything back again."
Economist Gary Burtless says the long-term unemployed face very tough odds because most job openings are filled by people who already have a job or who have only recently become unemployed.
"Employers tend to be suspicious of people who've been out of work for a long time," he says.
November's drop in unemployment and some positive economic data point to job seekers having slightly better chances in 2012. But as we discovered in 2011, a few good months can quickly turn into disappointment. With the European debt crisis threatening U.S. growth, a similar scenario could play out in the new year.