Inquiring minds are interested in figuring out how long it might take to get back to "full employment" defined as 5%.



John Mauldin touched upon this theme in Welcome to the New Normal.



John's analysis stopped short of making actual projections as to when full employment would return, or the detailed path it would take to get there year by year. However, I thank John for providing a nice starting point for discussion.



In Scarred Job Market Expected to Weigh on Economy The Wall Street Journal offers this look at how long it would take to return to employment levels before the start of the recession. Please consider the long road back.



The Long Road Back







Click On Any Chart In This Post For Sharper Image



The Journal states ...

"On average, the economists don't expect unemployment to fall below 6% until 2013"



The Journal goes on ...



"On average the economists -- not all of whom answered every question -- expect the unemployment rate to peak at 10.2% in February. But even once the employment situation stops getting worse, economists expect recovery to come slowly. "It could take until 2014-15 before we see a 5% handle on unemployment again," said Diane Swonk at Mesirow Financial."



6% by 2013?!

5% by 2015?!

Really?



Mapping Unemployment



To map unemployment projections year-by-year from now through 2020 there are a huge number of variables to take into consideration.



Factors Affecting Unemployment Projections

Current Hiring Trends

Demographics

Working Age Population Growth Projections

Boomer Retirements

Participation Rate

Part-Time Employment

Drivers For Jobs

Housing

Commercial Real Estate

Global Wage Arbitrage

Outsourcing

Double Dip Recession

Productivity

Manufacturing

Let's start our analysis with a look at monthly job growth trends from 1999 through 2009. John Mauldin posted the following chart, I filled in averages and outlined in blue previous recession periods...

[Ed note: Mish then runs through an extraordinarily detailed analysis and a couple of scenarios that you can read in detail here. And here's his conclusion:]

[I]n spite of all those generous assumptions, no double dip recession, no second recession, high rates of job growth and falling participation rates all the way through 2020, and unemployment peaking at 11.6% not 13%, the best I can do is suggest the unemployment rate will be over 10% all the way through 2015 and never dip below 8% all the way out through the end of 2020.

You can read the whole thing at Mish's site > You can also download Mish's spreadsheet and make your own assumptions.