The Unemployment Rate Changes in the unemployment rate over the course of the business cycle in normal times typically occur gradually, often characterized by persistence and momentum. Persistence means the variable will slowly gravitate to a historical average; momentum means the variable will continually move in the same direction for a period of time. Neither happened in 2020. The unemployment rate was volatile, moving significantly, rapidly, and in opposite directions. The chart below shows the U.S. unemployment rate since January 2020. The onset of COVID in 2020 caused the unemployment rate to skyrocket from a pre-COVID low of 3.5% in February 2020 to a peak of 14.8% in April, a two-month increase of 11.3%. The 10.4% increase that occurred in April was the largest monthly increase based on available Bureau of Labor Statistics data since 1948. Prior to 2020, the largest monthly increase in the unemployment rate was only 0.7% in April 1958. During the COVID crisis in 2020, the unemployment rate increased 11.3% over two months . During the financial crisis, the unemployment rate increased 5.6% over 29 months , from a 2007 low of 4.4% in May to a peak of 10.0% in October 2009. Beginning in May 2020, the unemployment rate began a consistent downward trend and reached 6.7% by year end. Strong job gains in October 2021 led to a further drop in the unemployment rate to 4.6%. In approximately a year and a half, the unemployment rate declined over 10%. The 8.1% drop that occurred in the unemployment rate from April through December 2020 was unprecedented. Prior to 2020, the largest drop in the unemployment rate that occurred during a given year was 2.1% in 1983. Although the overall unemployment rate has declined, differences in rates remain for major worker groups. The unemployment rate in October was 4.3 percent for adult men, 4.4 percent for adult women, and 11.9 percent for adult teenagers. The unemployment rate was 4.0 percent for Whites, 7.9 percent for Blacks, 4.2 percent for Asians, and 5.9 percent for Hispanics. In 2020, the unemployment rate for persons with a disability continued to be much higher than the rate for those without a disability, rising to 12.6 percent. In addition to employment challenges, unfortunately Social Security rules are restrictive and significantly limit the amount of income and assets that a disabled person may have. Even part-time employment could cause a disabled person to lose Social Security benefits, including healthcare, despite an employer not offering health insurance.
Unemployment Rate (16 yrs. and older) Source: Bureau of Labor Statistics
Central Wisconsin Report - Fall 2021
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