The Job-Filled Non-Recovery

I used to argue that the whole idea of a jobless recovery was a myth.  We weren’t getting many jobs because the recovery wasn’t occurring.  Growth was close to trend, so you wouldn’t expect a fall in the unemployment rate.

Now things are beginning to enter the Twilight Zone.  Last November the unemployment rate was 9.8%.  Now it’s 8.6%, a pretty big drop for one year.  Yet according to Okun’s Law the unemployment rate should have risen significantly.  Even if you adjust trend growth down from 3.0% to 2.5%, unemployment should have risen, as the four quarter growth in RGDP from 2010:4 to 2011:4 will almost certainly be under 2%.

Explanations?  Bad RGDP numbers plus bad unemployment rate numbers plus TGS plus people exiting the workforce.  That should just about cover it.