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Thursday, September 23, 2010

Unemployment and Employment Trends Before and After the End of Recessions

Linda Levine
Specialist in Labor Economics

The economy has been showing signs that the worst of the recession that began in December 2007 may be over. But, one economic indicator that is very visible in people’s daily lives—the unemployment rate—continues to rise. With the unemployment rate at 9.6% in August 2010, those still employed or able to find jobs are quite likely to personally know others who have been less fortunate. In addition, the still high percentage of workers without jobs for so long that their eligibility for unemployment benefits soon might be exhausted is of concern to Members of Congress who have extended benefit duration on more than one occasion since the recession’s onset. And, there is consternation in some quarters that employers have not yet begun to consistently hire or recall from layoff more workers than leave their employ despite enactment in February 2009 of the American Recovery and Reinvestment Act (P.L. 111-5) and in March 2010 of the Hiring Incentives to Restore Employment Act (P.L. 111-147).

This report addresses the question of when one might reasonably expect to see sustained improvement in the unemployment rate and a steady resumption of job growth. It first provides an explanation of 

why it was unlikely that the unemployment rate would begin trending downward before 2010, and 

why it was unlikely that the number of jobs would start trending upward until 2010.

The report then analyzes the trend in the unemployment rate and jobs data before and after the bottom of prior business cycles to confirm these statements. It concludes by noting that the very delayed improvement in the labor market following the 1990-1991 and 2001 recessions—whether measured in terms of the unemployment rate or job growth—led to the ensuing rebounds of the economy being referred to as jobless recoveries. With the labor market similarly failing to show consistent improvement thus far into 2010, many observers think that another jobless recovery is underway.

Date of Report: September 7, 2010
Number of Pages: 8
Order Number: R40798
Price: $19.95

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