"Employment Lags GDP" - Really?

Amid faltering job-growth pressures have risen on the Riksbank to cut rates. There is hence a fierce debate focused on these two issues going on here in Sweden right now; the job-market and the central-bank policy (here is the latest contribution, in Swedish). Rather than adding anything to this, which seems more than fully covered by mainstream media, I would just like to comment on a very common but partially unclear use of language in this context. It is often said things like that "the labour market lags the business cycle". But plotting annual changes in GDP against annual changes in employment as measured by non-farm payrolls, the two appears to have developed synchronous from 1970 up to today. Hence it is actually perfectly safe to say that:

the labour market does not lag the business cycle!

Still the above sounds highly controversial - why? To me it seems that when it comes to employment, we are not satisfied with seeing the annual change of it rising - we do not feel that things are going in the right direction before the employment itself is acutally rising. With GDP however, the story is different, as soon as the annual change of GDP - or "growth" - is rising, we cheer the event that the business cycle has bottomed out and brighter times lies ahead. That the GDP change is still negative does not seem to matter in this respect as long as it is rising. So when we say that

"Employment Lags GDP"

we simply mean that the number of employed lags the rate of change of annual GDP growth. Given that employment and production is neither significantly lagging or leading each other, this is the same as saying

"GDP Level Lags Annual Changes in GDP"

which is trivial. Yet it might have given many of us the false impression that much faster job creation lies ahead. But in the US, job creation is conditional upon GDP growth, which has recently stagnated. The best thing we can hope for in Sweden is for job creation starting off with the much awaited expansion in the service-sector. But so far we are still waiting.

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