U.S. Unemployment: Short and Rare

by: Mark Perry April 28, 2008    

Mark J. Perry, Ph.D.

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Pundits and the media continue to barrage us with recession claims, but unemployment data still do not support this. The graph above shows U.S. unemployment rates over the past 50 years. Note how the sharply the unemployment rate spikes upward at the onset of recessions.

click to enlarge

Where is the spike for 2008? So far, there isn't one. In fact, the unemployment rate for March 2008 is just 5.1%, significantly below the long run (50-year) average of 5.9%.

In addition, unemployment duration in the U.S. continues to be relatively short. The median duration of unemployment as of March 2008 is only 8.1 weeks: so the typical worker is only out of work for about two months! And as the pie chart below shows, unemployment lasts less than fourteen weeks for two-thirds of the unemployed.

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This article has 6 comments:

  •  
    Apr 28 08:51 AM
    Please, stop articles like this! I want to make a whole lot of money in the market with all these doomsdayers, and scare tactics. And you will ruin it with this sensible article!
    Seriously, there's so many reasons why we're not in recession. Definitely some sectors are in recession, some severe, but the economy as a whole is merely temporarily slow.
    Reply | Link to Comment
  •  
    Apr 28 10:00 AM
    I bet Karchad has made a ton of money since last summer where he bought at 14K market. Keep buying, hey, if everyone is bearish, we got a problem...
    Reply | Link to Comment
  •  
    Apr 28 03:54 PM
    Makes sense to me. In North Texas, the economy is chugging along very nicely. I won't say we're in a growth period, but it's not bad. We've lost some business and gained some at my firm. Overall, it's looking pretty good. Just glad I'm not a house flipper in Santa Barbara...

    Housing prices here are actually UP in desirable neighborhoods and inventory is not much at all. Those neighborhoods that attracted subprime borrowers may be experiencing more difficulties... probably so.
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  •  
    Apr 29 11:29 AM
    It's always been fascinating to me that a college student at any university will earn an "A" with a 95% score in any class (with rare exceptions), yet the economy gets an "F" with the same grade. Looked at another way, the job rate is 94.9%. Sounds like a "A" to me.

    Now, I'm not casting a blind eye to the sectors of the economy that are contracting. Home-building and related industries are contracting, to be sure. But the rest of the economy seems to be moving along, albeit more slowly than before, but still moving forward.

    I wonder if anyone has done a correlation analysis between the amount of media coverage on the economic slowdown and the resulting economic activity. It may be that the media frenzy creates a negative feedback loop, which depresses consumer sentiment, leading to less economic activity.

    Reply | Link to Comment
  •  
    Apr 29 02:00 PM
    Try to remember that the government's unemployment statistics do not include anyone who has drawn all of their unemployment benefits, and are STILL out of work. Nor do these entirely misleading stats include anyone who has given up looking for a job, after long efforts have produced no results. Nor do they include young (or not young) people who have never gotten that first job. Nor do the stats include anyone who was injured, and withdrew involuntarily from the labor market while recovering (if they were able to recover.) Nor do the stats include anyone who, due to poor health, fell out of the ranks of the employed. With so many categories NOT counted, it is difficult to know what the actual unemployment figure is, but it surely isn't as low as 5%.
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  •  
    May 13 02:33 AM
    karchad, [Comment edited for abusive language. Commenter put on notice] Only certain areas are in any kind of recession. Well think about this for just one minute.
    This isn't just hitting individuals either. Its hitting businesses as well. We have more businesses filing for bankruptcy that we have seen in 5 years. Our people have used up every available cent in the past 10 years. Using multiple credit cards to the max, using the equity in their homes till they owe more than 3 times what the home is worth.No one has any money and you can't have a thriving economy ,if no one has money to spend.
    Those out of work cannot afford new cars or houses(cannot pay their credit card bills or their electric bills, or much of anything for that matter,. with the economy already slowed down, you think this won't slow things even more? Causing others to be out of work? And what about those who are still employed (but on reduced hours) how much buying do you suppose they will be doing in the next 4 to 8 months? They too will contribute to a further slowing of the economy.
    Now add to that which i have already talked about , the fact that the older citizens (the ones who held all the wealth until now) ,their homes are worth less today than just 1 year ago,giving them less spending power, and they had the bulk of their cash in the stock market (which is down at least 16% from a year ago. Again taking away much of their spending power).
    This is a spiraling situation. We have not only the sub prime homes on our hands, but people who could actually afford to keep paying on their homes, are now walking away because the value of their homes have dropped to the point, they just say hell with it, and walk off.
    Come on , be real for once. This thing is not going away in a few short months. Its now affecting many other countries.
    Here is one nobody seems to talk about. The Philippines. They have low pay . They get jobs in places like America and send money home to help support their poor families, but with the dollar sinking in the mud, those dollars are buying less and less in the Philippines. Consequently, The Philippines economy is sinking along with ours.
    This is not a sector slowdown in any sense of the word , so get educated or shut the hell up.
    Food prices on the rise has already begun to affect other nations. And guess what? Its coming home to bite us in the ass ,cause now we have butter shortage in certain areas in America. And that won't be the only shortage to hit either you can count on that.
    Reply | Link to Comment
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