The Jobless Recovery to Remain Jobless

The National Association of Business Economists monthly survey of the sentiments of its members is as highly regarded a measure of the current state of the economy has any other. As part of its announcement of January results, the association released some good news:

About two-thirds of NABE Industry Survey panelists expect that real GDP will grow at a rate exceeding 2% between the fourth quarter of 2011 and the fourth quarter of 2012. Over 80% of respondents reported unchanged or rising sales and profit margins.

That sentiment was more than offset by another observation from the survey:

Although the share of respondents expecting increasing employment over the next six months continues to fall relative to prior quarters, almost two-thirds of respondents expect no change in employment — the highest percentage of panelists holding such a view in recent quarters.

The economy continues to strengthen but the job market does not. The jobless recovery is supposed to have ended as increased business activity requires a larger labor force. That assumption apparently is not true.

The NABE Industry Survey also showed that increasing numbers of economists see price stability and few are worried about the European debt crisis or trouble in Washington. That means most of those surveyed think that the U.S. recovery will be so overwhelmingly strong, even at a modest pace, that there is insufficient imminent trouble to cause another slowdown.

The NABE members certainly are aware that productivity in the U.S. must be close to its limits. It is now nearly four years since companies began aggressively to squeeze more work out of fewer people. Data continue to show that corporations have increased investments in automation as they keep work forces small. But there is a point at which machines cannot completely duplicate human work.

The NABE data illustrate the remaining schizophrenia about how American companies think they can operate. The economy can improve, steadily and gradually. Corporations can benefit from this without adding costs. The recovery can be jobless. As long as businesses believe that, jobs will not be added until employers think it is absolutely necessary. That, in turn, hurts that chances that the NABE is right about the recovery. Those unemployed people are not consumers, or will not be for long.

Douglas A. McIntyre