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Economic Growth and the Unemployment Rate

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CRS – Economic Growth and the Unemployment Rate, Linda Levine, Specialist in Labor Economics, January 7, 2013

  • “A persistently high unemployment rate is of concern to Congress for a variety of reasons, including its negative consequences for the economic well-being of individuals and its impact on the federal budget. The unemployment rate was 9.5% when the economy emerged from the 11th postwar recession in June 2009. It climbed further to peak at 10.0% in October 2009. The rate has slowly declined since then. Although it dropped below 8% in the fourth quarter of 2012, the unemployment rate remains high by historical standards. After most postwar recessions, it took at least eight months for the unemployment rate to fall by
    one full percentage point. The slowest decline occurred following the 2001 recession’s end, when the unemployment rate was a comparatively low 5.5%. About 3½ years elapsed before the rate fell just one-half of one percentage point. In contrast, the recovery from the severe 1981-1982 recession began with the highest unemployment rate of the postwar period (10.8%). In that instance, it took only eight months for the rate to fall over one percentage point. Some hoped the unemployment rate would fall as quickly after the 2007-2009 recession, but the speed of improvement has been more typical of the so-called jobless recoveries from the 2001 and 1990-1991 recessions.”
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