Table 3 Lifecycle of the Expansion
12
6/20
10
9/20
8
6
9/21
4
12/19
2
0
38.5
39
39.5
40
40.5
41
Average Weekly Hours
Description: • Table 3 plots the unemployment rate against average weekly hours in manufacturing on a quarterly basis since the fourth quarter of 2019. • There are four phases: 1. In the initial phase of an expansion, unemployment is stable and remains high while there is a sharp rise in hours per week. 2. In the second phase, the unemployment rate falls while hours per week tend to be relatively stable. 3. In the third phase, the unemployment rate is stable and hours per week decline. 4. A contraction occurs when unemployment rises and hours per week falls). Analysis: • The unprecedented nature of the impact on the economy is well illustrated in the above chart. • Traditionally, plotting the unemployment rate against average weekly hours has been a great way of tracking the business cycle. In the past, changes in both these variables from quarter to quarter have been incremental, resulting in loop-like configurations. The pandemic has interrupted that pattern. • The initial impact of the pandemic can be seen by sharp increase in the unemployment rate and sharp decline in average weekly hours in 2020 Q2 (6/20). For 2020 Q3 (9/20) the economy rebounded quickly with significant declines in the unemployment rate and expansion in average weekly hours. • Since that time, the changes in both variables have been more in line with pre-pandemic patterns.
Central Wisconsin Report - Fall 2021
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