The more I look at the US, the more I see unpleasant parallels to Canada's experience of the 1990's - what Pierre Fortin called The Great Canadian Slump. Even after we emerged from the worst of the 1990-91 recession, we still had to deal with a large current account deficit, out-of-control government deficits and significant NAFTA-induced sectoral shifts. The outlook for the US is depressingly similar, although their sectoral shifts are associated with re-allocating resources away from construction and finance.
One thing in particular jumps out at me: the spike in long-term unemployment in the US. Unemployment is bad for many reasons, but long-term unemployment is particularly harmful. As the duration of the unemployment spell lengthens, workers may find it harder to find work that makes best use of their skills; many will either start over in another field or abandon the work force entirely. Either way, human capital is destroyed and the economy's productive capacity is diminished.
Here are graphs of the number of people unemployed for 27 weeks or longer, expressed as a percentage of the working-age population and as a percentage of the total number of unemployed. The data are not seasonally adjusted.
I suspect that we'll be hearing the expression 'jobless recovery' quite frequently in discussions of the US economy over the next few years.