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Wednesday, January 12, 2011

Unemployment and Employment Trends Before and After the End of Recessions

Linda Levine
Specialist in Labor Economics

Although the 11th recession of the postwar period officially ended in June 2009, one economic indicator that is very visible in people’s daily lives—the unemployment rate—has continued to rise. With the unemployment rate at 9.8% in November 2010, those still employed or able to find jobs are quite likely to know personally others who have been less fortunate. The still high unemployment rate partly reflects the slow pace at which employers have been adding workers to their payrolls despite enactment of job creation legislation in February 2009 (the American Recovery and Reinvestment Act, P.L. 111-5), March 2010 (the Hiring Incentives to Restore Employment Act, P.L. 111-147), and August 2010 (the Education Jobs Fund at Title I of the FAA Air Transportation Modernization and Safety Improvement Act, P.L. 111-226).

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 following a recession’s end. It first provides an explanation of why it is unlikely that the unemployment rate would begin trending downward and the number of jobs on employer payroll would begin trending upward immediately after the start of a recovery. It then analyzes the trend in the unemployment rate and jobs data before and after the bottom of the prior 10 business cycles to confirm these statements.

The report concludes by noting that the much delayed improvement in the labor market following the 1990-1991 and 2001 recessions led to the ensuing rebounds of the economy being referred to as jobless recoveries. With employment at public and private sector employers similarly having failed to show consistent improvement for well over a year after the recession’s end, many observers think that the nation has been experiencing another jobless recovery.

Date of Report: December 21, 2010
Number of Pages: 7
Order Number: R40798
Price: $19.95

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