SOME PERSPECTIVE ON THE HIGH UNEMPLOYMENT RATE

By Chart of the day:

Today, the Labor Department reported that the unemployment rate held steady at 9.5%. Assuming that the recession ended in June 2009, the current unemployment rate is exactly where it was at the end of the recession (9.5%). For some perspective on the current state of the labor market, today’s chart illustrates the amount of time it took for the unemployment rate to ultimately dip below (and stay below) its recession-end level for each recession since the late 1940s. For example, at the end of the recession that ended in November 1982, the unemployment rate stood at 10.8%. As the chart illustrates, it took two months for the unemployment rate to drop below (and stay below) the recession-end level of 10.8%. It is noteworthy that, over the past two decades, it has taken significantly longer (on average) for the unemployment rate to drop below its recession-end level. The reasons for this increased time for the unemployment rate to turn around varies. However, one explanation has it that following World War II, the US found itself in a strong/dominant economic position. It took time, but eventually many of the remaining world economies began to recover and we are currently witnessing increased competition as a result of the rise of the rest.

Notes:
– The market is at a critical juncture. Where we go from here may surprise you. Find out right now with the exclusive charts of Chart of the Day Plus.

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