The unemployment rate hit a record high of 14.8% in April 2020, which surpassed the previous high of 10.8% in 1982. Despite the economic recovery beginning in May 2020, the economy stalled with 243,000 job losses in December 2020 and the unemployment rate stuck at 6.7%. The economic recovery regained momentum in 2021, and the unemployment rate gradually declined from 6.4% in January to 3.9% by yearend. The trend continued in 2022 with unemployment dropping to 3.6% in December before bottoming out at 3.4% in January 2023, the lowest rate since 1969. The unemployment rate began increasing slightly in late 2023, reflecting a cooling of the labor market and increased labor force participation. The unemployment rate of 4.1% in October 2024 was still relatively low compared to historical levels and total employment was at an all-time high. Labor Market 2025 Preview The labor market generally mirrors economic growth. If economic growth is strong, then so is the labor market. If economic growth is weak, then so is the labor market. The strength of the labor market in 2025 will hinge on continued economic growth. 2024 ends with the economy on a roll and moderate economic growth expected to continue, which should result in a relatively strong labor market in 2025. However, once again uncertainties result from a new President and administration, including the effects of new fiscal and monetary policies and any changes to the labor market. The labor market could also be impacted by tariffs imposed by foreign countries on U.S. exports in retribution for new U.S. tariffs. Global and U.S. Inflation Global inflation, including inflation in the United States, has declined significantly since peaking in 2022. The decline played a major role in the Federal Reserve’s decision to cut interest rates in 2024. The graph below shows the annualized U.S. inflation rate since June 2022, as measured by the twelve-month change in the Consumer Price Index. The annualized inflation rate for October was 2.6%, up slightly from September’s 2.4%. Shelter (housing and rent) continues to be a primary driver of prices, accounting for over half of the price increase in October. Generally, inflation has consistently declined from its peak of 9.0% in June 2022 to 2.6% in October 2024. The monthly increase in prices was 0.2% in 2024 for each month July through October.
Percent Change in Consumer Price Index from One Year Ago June 2022–October 2024 (Sources: U.S. Bureau of Labor Statistics, Federal Reserve Economic Database)
The table below shows the annual inflation rate for Europe, the United Kingdom, Canada, Australia, Mexico and the United States from 2020 through September 2024. Although there are regional differences, note that the trends in inflation are similar across most countries. The trends are similar because global factors impacted global prices. Near record or record levels of inflation were recorded for the United States, the Euro Area, Canada, and the United Kingdom in 2022. Global inflation increased in 2021 as supply chain problems appeared and global oil prices began rising due to the economic recovery. Those factors peaked in 2022, with price spikes in global energy and food prices linked to Putin’s invasion of Ukraine and lingering supply chain issues which contributed significantly to inflation. The mitigation of global factors that contributed to inflation are reflected by the significant decline in inflation that has generally occurred around the world since 2022.
Central Wisconsin Report - Fall 2024
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