In the wake of the lackluster update to the ‘jobs report‘ that was recently released, I thought I’d post a quick update regarding the macroeconomic data that we used in our MegaTrends Infographic.  We recently refreshed the data to include the year to date.  Below are the updated graphs and some brief thoughts:

Percent Change From Preceding Period in Real Gross Domestic Product, Q1 1980 – Q1 2012
Source: Bureau of Labor and Statistics

Above is a graph of the percent change in quarterly GDP from the previous period since 1980 – the green represents the percent change while the red line represents the average across the last 3+ decades (80s, 90s, 00s, 10s).  The most noteworthy feature is the drastic decrease in Q4 ’08, where GDP was 8.9% lower than in Q3 ’08.  While growth in the last few years has not been explosive, GDP has not regressed.  We have witnessed a steady increase in GDP each quarter.  The average quarterly increase since Q1 ’00 has been 2.3% – an improvement over the last decade but not quite at the levels witnessed in the 80s or 90s.

Unemployment rate, seasonally adjusted, January 2007 – May 2012
Source: Bureau of Labor and Statistics

Above is a graph of the unemployment rate from January ’07 to April ’12.  The rate has been on a very slight decline since it peaked at 10% in October ’10 but it has not broken below 8% since January of ’09.

Duration of unemployment, percent distribution, January 2007–April 2012

Source: Bureau of Labor and Statistics

The graph above shows the percentage of unemployed that have been so for longer than 27 weeks, so called ‘Long-Term Unemployment’, since January ’07.  Long-Term Unemployment is particularly troubling as more and more of those unemployed find that their skills are diminished or are no longer suitable for employment.  Notice that the shape of the curve mimics the one directly above it, which indicates that there is likely added pressure on reducing the unemployment rate attributable to a mismatch of skills possessed by the unemployed and those desired by potential employers.

Postwar Recessions (1946-2008): Cumulative Decline from NBER Peak (pct)

Source: Federal Reserve Bank of Minneapolis

The graph above shows the number of months it took to return to peak employment for every recession since WWII.  I’ve highlighted the last two – 2001 & 2007 – in red, as they are clear outliers.  The recession that began in 2001 took roughly 46 months to recover.  The current recession, which began in 2007, has yet to recover after 53 months and also saw the steepest decline in employment as compared to the peak.  If you look back a bit further, you will see that each of the last 4 recessions have set the mark for the longest ‘time to recovery’, which leads me to believe that structural unemployment is becoming a much greater problem as our economy continues to evolve.

Labor Force Participation Rate: 25-54 years, Men, January 1948 – May 2012

Source: BLS Data via Economagic

Structural unemployment is also a likely contributor to the graph above, which shows the labor participation rate for men aged 25-54 since WWII.  Skills are rapidly becoming obsolete for both blue-collar and white-collar jobs due to technological advancement in mechanization, automation and process improvement.  Already, we are seeing that the skills learned in school or early in careers (for those college graduates that are able to find early career track jobs) are no longer enough to support an entire 40 year career for many Americans.  As technology continues to evolve at an increasing rate, this is only going to become more apparent.

Looking back to the MegaTrends, the new data heavily support the continuation of the “personal efficiency” trend.  Persistent unemployment and underployment play a strong role in creating demand for the various platforms that allow individuals to monetize their existing assets and talents.  The collaborative consumption, crowd sourced labor and digital cottage industries sectors will continue to grow while these conditions are present.  At LaunchCapital, we will continue to search for innovative businesses that can create ways for the displaced members of the labor force to monetize their existing skills and/or to learn new skills.

 
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