Is the labor market still stuck at its “new normal”?

The Bureau of Labor Statistics (BLS) noted on its website yesterday that in 2011, “annual totals for [layoff] events and initial claims were at their lowest levels since 2007.” Nonetheless, today’s report that the Fed open-market committee plans to keep short-term interest rates low until late 2014 reminds us of the obvious but unfortunate fact that the current slump in employment growth is continuing.

Appearing at the top of this post is a chart showing monthly Bureau of Labor Statistics (BLS) figures on new hiring, which remains very slow. Last week, in citing similar data, Ed Lazaer argued that “If jobs are scarce and wages are flat or falling, decent increases in the gross domestic product or the stock market are almost irrelevant” (WSJ link here). One should not forget that the last official recession began in December 2007—well over four years ago. (National Bureau of Economic Research recession dates are indicated with grey shading in the figure above.)  Such dates are somewhat arbitrary. To take another example, the BLS’s broadest labor underutilization rate still stood at 15.2 percent as of last month, down only modestly from 16.6 percent the previous December.