The Anatomy of Slow Recovery
Jo Walton on Shakespeare’s Henry V, Part 2

"Gaining Altitude"?

Greg Ip is happy in paragraph 1:

America's recovery: The pieces are falling into place: TURN off the alarms. After several weeks when the data pointed to a recovery still struggling to achieve escape velocity, the March employment report provided reassuring evidence that, at a minimum, it is still gaining altitude...

By paragraph 4, however:

The second reason for the rapid drop in unemployment is that the number of people either working or looking for work (the labour force) has not grown since November, which is a surprise: typically, you’d expect that the return of discouraged workers to the job hunt would buoy the ranks of the officially unemployed.... The participation rate, the share of the working-age population in the labour force, remained stuck at 64.2%, the lowest since 1984. Economists keep expecting participation to rebound, which is one reason they were anticipating a higher, not lower, unemployment rate. The fact that participation refuses to rise is a troubling sign...

He could have said something similar about the employment-to-population ratio.

But by paragraph 6:

This report is solidly positive for the economy: bit by bit the pieces of recovery are falling into place...

But in paragraph 7:

[O]ther economic data is not as upbeat as employment. Recent reports... suggest the economy is growing at just a 2% to 2.5% annual rate in the current quarter.... [W]hile employers are hiring more workers, they haven’t added to their hours.... [T]he data point to an economy growing at or slightly above its potential rate, but hardly surging, which is likely to be the pattern for the next several years while deleveraging proceeds apace. If underlying demand remains stubbornly sluggish, because of higher oil prices for example, employment could peter out again.... Average hourly earnings were flat last month, and are up just 1.7% from a year earlier.... The surge in oil prices is eating into disposable income and being felt in consumer spending...

There is "recovery" in a sense that the output gap and the employment gap are no longer shrinking--and so that real GDP is growing at the rate of growth of potential output. But this is not reason to "turn off the alarms." This is not reason to talk about "pieces [of recovery]... falling into place." And I am not sure I would describe this as "gaining altitude" with respect to the state of the business cycle.