US on track for ‘full employment’

The
US could be looking at ‘full employment’ again within a year if its economy
rebounds with even half the momentum of previous recoveries, according to
analysis by employment consultants Watson Wyatt.

Watson
Wyatt looked at unemployment during the current and past five recessions, and
subsequent growth in the year following.

"A
combination of relatively low unemployment during the downturn and historically
low labour force growth projected for the coming year means that we may quickly
see a return to full employment," says Dr Sylvester Schieber, economist
and director of research at Watson Wyatt.

‘Full
employment’ was defined as the level of employment that stops just short of
creating inflationary pressures on wages, as defined by the Congressional
Budget Office (CBO).

With
the CBO pegging ‘full employment’ at 5.2 per cent, the US would need to see a
pick-up in employment of just 1.2 per cent to reach full employment in the
coming year, Watson Wyatt said. Employment has grown an average of 2.6 per cent
in the year following earlier recessions.

"Even
a modest recovery will tip us back to full employment," says Dr
Schieber.  

www.watsonwyatt.com

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By Quentin Reade