Table 5 Lifecycle of the Expansion
Description: • Table 5 plots the unemployment rate against average weekly hours in manufacturing on a quarterly basis since the first quarter of 2020. • There are four phases: • In the initial phase of an expansion, unemployment is stable and remains high while there is a sharp rise in hours per week. • In the second phase, the unemployment rate falls while hours per week tend to be relatively stable.
• In the third phase, the unemployment rate is stable and hours per week decline. • A contraction occurs when unemployment rises and hours per week falls. Analysis:
• The persistence of a historically low unemployment rate combined with an increase in average weekly hours since Q4 2022 indicates a remarkably resilient economy. Previous to Q1 2023, average weekly hours had fallen modestly over 2022 which, in the past, signals a slowing of the economy. Employers often reduce hours before laying off workers. The modest increase in average weekly hours goes against last year’s trend.
Central Wisconsin Report - Spring 2023
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