The purpose of the jobs gap is to estimate the number of jobs that the economy must add to eliminate the negative consequences of the recession.
Originally launched in December 2010, the Russell Sage Foundation’s initiative assessing the effects of the Great Recession on the economic, political and social life of the country is now closed. consumer credit and mortgage borrowing expanded rapidly prior to the 2008 financial crisis, allowing relatively unsophisticated consumers to decide how much they could afford to borrow, explain Mitchell and co-authors Annamaria Lusardi and Noemi Oggero in ““One of the most important decisions people make during retirement is how to decumulate wealth, yet our results imply that aging Americans will also need to manage and pay off heavy debt burdens in retirement,” they note. Technically speaking, the financial crisis of 2008, the biggest economic meltdown in the U.S. since the Great Depression, lasted a little more than 18 months, and ended long ago. Safety net programs—some of which were expanded during the recession and its recovery—mitigated some of the worst effects, but were not available to all households and … Over the past several years, projections in labor-force growth have been revised sharply downward. “For millennials, ages 25 to 35, they have really declined, shown by the increase in rentership, but also the historically high percentage of people who are “We don’t properly know why wages and job conditions stayed low, and until we do, we don’t know when this will change.”Tight lending standards include higher down payments, higher credit-score requirements, and a debt-to-income ratio that is lower.

Many of those people never recovered; they never got real work again,” says Wharton management professor “It was a very traumatic event. The CBO forecasts provide a more consistent series of estimates, are updated and revised more regularly, and reflect CBO’s estimates of growth in the potential level of economic output. Next, they simulate anticipated changes in behavior given lower real expected returns and compare outcomes with the baseline results.What they find is that persistently low returns shape behavior across a heterogeneous population. But if certain key drivers materialize, homeownership could plunge, according to findings by Wachter, Laurie S. Goodman and Arthur Acolin in ““Our base case average scenario forecasts a decrease in homeownership to 57.9% by 2050, but alternate simulations show that it is possible for the homeownership rate to decline from current levels of around 64% to around 50% by 2050, 20 percentage points less than at its peak in 2004,” they write.The current and post-WW II normal of two out of three households owning may hold, but only if credit conditions improve; if, as we move toward being a majority-minority nation, minorities’ economic endowments move toward replicating those of majority households; and if recent rent growth relative to income stabilizes, the researchers say.Of course, tighter credit requirements necessitate applicants with less debt and better-paying jobs.

These challenges are exacerbated by older persons’ unwillingness to sell their homes, move to smaller homes, or engage in reverse mortgages.”But will future generations have homes and the equity socked away in them to draw upon in retirement? Figure 2 illustrates that, even if we ignore the slower-than-expected population growth, there were fewer workers in every age category than the BLS had predicted in 2009.
It is tempting to settle for a new normal, but the economy will not be fully recovered until today’s missing workers are back at work.

On the other hand, it is appropriate to reduce the jobs gap for lower-than-expected population growth.Beginning this month, we base the jobs gap calculations on labor-force forecasts from the Congressional Budget Office (CBO), rather than from pre-recovery projections from the Bureau of Labor Statistics as we have done previously. “But it’s easier to ignore that, so we are.”This is not to say that the greater meaning of the financial crisis is a settled matter.     It took 25 years for the stock market to recover. But these lost jobs are only one of the contributors to the jobs gap. That’s a relatively small crowd compared to the much broader benefits.”At the same time, though, the failure to be more aggressive — to drop interest rates sooner, to consider pushing inflation higher — may have caused real harm to those millions of people displaced by the crisis, Conti-Brown says. As figure 1 illustrates, there are currently 1.9 million fewer working-age individuals in the United States than the BLS had projected in 2009 (before the Great Recession’s extent was fully evident). The Wharton School is committed to sharing its intellectual capital through the school’s online business journal, Knowledge@Wharton.


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