Editorial: Phew, there wasn’t a red wave. But it’s too soon to exhale. All that happened in 2015 was that the US economy added 3.1 million jobs, the first time since 1996 that it got that big in a single year. What’s more, this year’s performance will probably lead to slightly larger gains than we’ve seen in the past. So that’s something. And that’s something to be proud of, given what an impact of the financial crisis it had on the US housing market. While that may have caused an overhang, as was evident in the subprime crisis, it’s still likely to have led to a much lower level of foreclosure.
Of course, even with a healthy economy, America’s still got a lot of people struggling to pay their mortgages. With the economy having generated jobs, the number of Americans unemployed was cut in half. But that number is still very high by historical standards, reflecting a big labor market drag.
And that’s the elephant in the room here — what went right in 2015; what went wrong in 2015, as well as how the numbers can be used as a rough gauge for what could be expected in 2016 and beyond. For instance, it’s a good indicator of how housing still is the biggest drag for US economic growth while the unemployment rate is at the lowest it’s been in 21 years.
That said, all of that is still some way off, as we get into 2016, and much of the data out there on the economy this year is still too fluid and incomplete to make any concrete judgments about the past or the future.
How bad was the year for America’s economy? Here’s the annualized pace of change. You can see that in the first chart, where the numbers are on a log scale.
The annualized pace of this year’s growth was 3.1 million jobs, which is the first straight year of job growth since 1996. But this is still a very modest pace, because this year’s growth figures are still very low compared with the long run average that is closer to 4.3 million jobs a year.
Looking at another measure of progress, I’ve shown here below the employment-to-population ratio — the percentage of working-age people who are employed. This year it was just 71.9%, which is the lowest rate since 1966.