U.S. Unemployment: Short and Rare

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.

Comments

[karchad]

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.

[punk_ash]

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...

[Dave McBlues]

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.

[billddrummer]

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.

[WAKEUP]

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%.