It's still a recovery

Recent data is all indicating that the economic recovery is back on track (if not the best of all possible tracks) after some tense moments over the summer. Initial jobless claims have started falling again, stocks are up, exports are up,... Earlier this month the Bureau of Labor Statistics reported that hours worked in the second quarter of 2010 rose at the highest rate since the first quarter of 2006. Since October 2009 aggregate hours worked in the private sector has increased 2.4 percent. This would translate into 2.5 million private sector jobs if the workweek stayed constant; the reason we have seen an increase of only 755,000 private sector jobs over that time is that much of the increase in hours showed up as an increase in hours worked per week. Average weekly hours fell from about 34.6 to 33.8 during the recession and have crawled back to 34.2. That is, we've erased about half of the fall in weekly hours. This suggests that meaningful job growth is not too far in the future.

The latest piece of good news is retail sales: up 0.4 percent overall in August, 0.6 percent excluding motor vehicles and parts.



Alan Krueger says there's hope for meaningful recovery in the months ahead. Most interestingly, he argues that the reason recoveries have been "jobless" in the last few decades is that companies use recessions to increase productivity by restructuring. That phase of this business cycle, he says, is over.

So I'm starting to get optimistic again.