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Next recession will include another ‘jobless recovery,’ report says

October 28, 2014

The American Institute for Economics Research found recessions and recoveries have changed since the 1990s. Recessions have become less frequent, but they are now caused by structural changes in the economy and lead to longer periods of high unemployment and “jobless recoveries.”

“This research shows that we are living in a new era of business cycles,” institute President Stephen said. “Recessions are increasingly tied to major shifts in the structure of industries and jobs, and people need to be prepared for those shifts.”

Productivity, the rise of the service sector and government policy have reduced the frequency of recessions but deepened their severity, according to the institute’s analysis authored by Senior Research Fellow Polina Vlasenko. The analysis examined the cause and effects of economic downturns since 1948. It found the last three recessions — in 1990, 2001 and 2007 — followed unusually long expansions, averaging almost eight years, but that employment took much longer to recover. It also showed recessions now feature more permanent layoffs than in the past.

People and businesses can make preparations.

“Individuals can make sure they have adequate savings to manage longer downturns, and build transferable job skills to compete in the future marketplace,” Adams said. “Businesses can be more resilient by adopting known management best practices, take a more active role in re-training their workers, and by engaging their customers in product innovation.”

The American Institute for Economic Research is an independent economic research institute based in Great Barrington, Mass.