Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Jobless Recovery

What it is:

A jobless recovery refers to a sustained economic upturn accompanied by persistent or increasing unemployment levels.

How it works (Example):

The New York Times first used the term "jobless recovery" in the 1930s to express a span of time during which the economy experiences growth, but the employment level does not. Analysts suggest that this is because employers find it more effective to allocate more production hours and work among their existing labor force rather than hire additional staff.
For example, suppose that unemployment reaches 10% during a recession. Within an 18-month period following this recession, the economy grows by 5%. If the unemployment level remains at or near 10%, the recovery qualifies as a jobless recovery.

Why it Matters:

An economic recovery brings a sense of optimism to consumers. A jobless recovery does not have this effect because those who were affected by unemployment during the recession continue not to benefit despite overall growth.