The Unassuming Economist

From Conversable Economist:

“The Federal Reserve Bank of New York puts out a monthly publication called “U.S. Economy in a Snapshot,” a compilation of figures and short notes about the most recently available major macroeconomic statistics. As we take a deep breath and head into 2022, it seemed a useful time to consult pass along some these figures as as a way of showing the path of the US economy since the two-month pandemic recession of March and April 2020.

Here’s the path of GDP growth. It has clearly bounced back from the worse of the recession, but it still remains about 2% below the trend-line from before the recession occurred.

Part of the reason why GDP has not rebounded more fully lies in what is being called the “Great Resignation”–that is, people who left the workforce during the pandemic and have not returned. Just to be clear, to be counted as officially “unemployed” you need to be both out of a job and actively looking for a job. If you are out of a job but not looking, then you are “out of the labor force.” Thus, you can see that while the unemployment rate based on those out of a job and actively looking for work is back down to pre-pandemic levels, the labor force participation rate–which combines those who have job and the unemployed who are looking–has not fully rebounded. A smaller share of the labor force working will typically translate into a smaller GDP. When or if these potential workers return to the workforce will have a big effect on the future evolution of the economy and public policy.”