Sunday, May 1, 2011

Unemployment: Long-Term Trend

I undertook the tedium of charting unemployment, by month, from January 1948 until March 2011 using data obtained from a Bureau of Labor Statistics facility here. These data, like all employment and unemployment data always, refer to nonfarm employment. I’ll show the data first then them make some comments.


Two rather interesting facts become apparent. One is that our current recession was not the most dramatic—at least not if viewed through the unemployment lens. We experienced the worst unemployment in this 63-plus-year period in November and December of 1982, spilling over into 1983. Beginning in September of 1982 and ending in June of the following year, we had a period of ten months in which unemployment exceeded 10 percent, reaching 10.8 in the peak months already noted. The lowest rates we’ve experienced in this period came in May and June of 1952, 2.6 percent in each of those months. In the 1952-1953 years, we had thirteen months in which unemployment was less than 3 percent. Our own highest, in this set of numbers, came in October 2009 (10.1%). The rate reached 10 percent only in that one month throughout the 2007-2011 period. Now some people say that many are giving up and therefore are not even counted among the unemployed—and that may be true.

The second interesting observation here is the trend, marked in red. It is based on 759 monthly data points, hence it is not a trivial calculation. The trend shows that unemployment levels have been steadily rising. Until about 1987, we could expect unemployment rates to be nearly 5 but under 6 percent. After that our expectations must be for a sustained unemployment level over 6 percent—and rising.

The economy needed more people to sustain it in the early part of this history than it now needs. What happens to the people who’re no longer needed?

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