Rajan on the Jobs Numbers

http://www.futureofcapitalism.com/2011/01/rajan-on-the-jobs-numbers

A professor at the University of Chicago, Raghuram Rajan, has a piece up about the jobs numbers:

the history of recent recessions suggests that we should not be surprised that the job recovery is taking time. There is, however, an aspect of the problem that is different this time: layoffs in construction....

In the last boom, construction jobs expanded significantly, with investment in housing as a share of GDP increasing by 50% from 1997 to 2006. As my colleague Erik Hurst and his co-authors have shown, states that had the largest rise in construction as a share of GDP in 2000-2006 tended to have the greatest contraction in that industry in 2006-2009. These states also tended to have the largest rise in unemployment rates between 2006 and 2009.

The unemployed comprise not only construction workers, but also ancillary workers, such as real-estate brokers and bankers, as well as all those who work on houses, such as plumbers and electricians....In other words, were it not for construction, the US unemployment rate would be 6.5% – a far healthier situation than today.

by Editor  |  Jan 7, 2011 at 1:03 pm Related Topics:  Housing receive the latest by email: subscribe to the free futureofcapitalism.com mailing list