The Rebound

Mark Doms at the Commerce Department brings us this picture of employment growth in 2011, where I think you’ll see that there’s precious little sign that recovery from the downturn involves really important structural transformations of the economy relative to where we were before. At least that’s true within the private sector. What has happened is that we’ve seen what’s basically a historically unique sustained decline in the quantity of people employed by state and local government. The fact that Barack Obama has been president during this time tends to somewhat confuse people’s analysis, but we basically just ran a year-long experiment in the idea that curtailing the public sector would supercharge private sector growth and it’s a bit hard to see the supercharging in the data.

What I think will happen next year is that the state/local government shrinkage will basically stop which should improve the overall picture.