Savvy Trades and Investments

[gilead23]

A bit of perspective on unemployment and recessions

I see reason for caution, but I keep hearing unemployment indicates there will not be a recession

Here is the trough unemployment during the expansion phase of the business cycle and the unemployment rate at the first month of recession based on NBER dates. Note NBER does it by quarter so I'm going first month of the quarter


1990 recession
5% trough start of recession 5.5%

2000 recession
3.8% trough start of recession 5.3%

2008
4.4% trough start of recession 5.0%

1981
7.2% trough start of recession 7.2%

1980
5.7% trough 6.3% start of recession

1976
4.6% trough start of recession 4.8% (trough 1 month prior to recession)

1969 trough 3.4% start of recession 3.5%

And today
trough 3.4% today's unemployment 3.6%

None of which says a recession is coming. It says anyone who says "herp derp unemployment is low we can't have a recession" (cough cough Janet Yellen cough cough) is an idiot.

It is extremely typical to have unemployment at low levels immediately prior to a recession. In some cases right as the recession starts and even below structural unemployment rates which is where we were in 1969.

Just something to ponder.