Saturday, May 9, 2020

Astonishingly dreadful labour force data

I've been collecting data for the Great Depression to compare what happened then with the Covid Crash.  One of these time series is the  US unemployment rate.  There are some breaks in the series, but, as with most historic series, it's the best we have.

The first chart shows the unemployment rate, from 1929 to 2020.  The Great Depression began in 1930, deepened through 1931 to 1933, before a recovery began.  Full employment only returned when war started (deficit spending, anyone?)  So.  The unemployment rate now is higher than it's been since WWII, but not as bad as in the worst year of the Great Depression.  But remember—it's not over, yet.  Unemployment will rise again in May and most prob'ly also in June. 



The 6 month change in the unemployment rate is closely correlated with the economic cycle.  Because when the economy goes down, unemployment goes up, and vice versa, I've plotted the six month change inverted.  The rise in unemployment over 6 months (shown as a fall in the chart below) is worse than anything experienced during the Great Depression.  Worse.


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