The US unemployment rate chart shows the percentage of workers in the labor force who are unemployed. It is a crucial marker of the robustness of the nation's economy. Unemployment usually falls when there is economic prosperity and rises when there are recessions. The US unemployment rate chart shows that the rate fell during the various wars fought by the country, including World War II. Following the wars, there were recessions. So, the unemployment rates also experienced a rise, according to the US unemployment rate chart.
Let us find out more about the US unemployment rate chart and how the rate functions.
The US unemployment rate chart keeps a tab on the business cycle. Recessions cause high unemployment. Firms downsize their labor force during recessions. This leads to unemployed workers who have less money to spend. Business revenue is reduced due to the lower spending by consumers. This forces firms to cut even more workers from their payroll. This downward spiral has very bad effects on the economy. According to the US unemployment rate chart, the highest rate of unemployment in the country was 24.9%. This was when the Great Depression happened in 1933. The rate of unemployment stayed above 14% for the next seven years. After that, it remained in the single digits for the next 40 years. Subsequently, it touched 10.1%. The rate touched 10% in 2009 when the Great Recession happened.
The federal government acts when the rate on the US unemployment rate chart goes more than 6%. The Federal Reserve lowers interest rates by utilizing expansionary monetary policy. Congress utilizes fiscal policy to give extended unemployment benefits and create jobs. When there is an expansion phase in the business cycle, it causes a fall in the unemployment rate. The all-time lowest rate of unemployment was 1.2% in the year 1944. You may think that the lower the rate on the US unemployment rate chart, the better. But that is not true. According to the Federal Reserve, the steady unemployment rate stays between 3.5% to 4.5%. If the rate falls outside this range, there could be too much inflation in the economy. Consequently, organizations will not find a skilled labor force that will help them grow their operations.
The US unemployment rate chart is a lagging indicator. The economy may start its recovery from a recession. But the US unemployment rate chart may stay in its downcast position for some time. Most organizations stay reluctant to expand their workforce until they are sure that the economic recovery has started. This may take several quarters of improvement as the US unemployment rate chart takes time to reflect that change.
The actual unemployment rate is also called the U-6 unemployment rate. The rate considers that part of the workforce that are working part-time but would like to work full-time in a position. Many experts say that this is the actual unemployment rate. The rate factors in everyone who would accept a full-time job if they got one. The rate is a helpful way to find out the amount of slack present in the labor force. The Bureau of Labor Statistics also calculates several other unemployment rates. The real unemployment rate factors in discouraged and marginally attached workers. Unemployed workers usually can be divided into one of the following categories.
- Long-term unemployed: This category has citizens who have been on the lookout for work for at least a month. These people have been without any job for more than 27 weeks.
- Marginally attached to the labor force: This category has workers who have not tried to get any work for the past month. But they had been searching for jobs in the past year.
- Discouraged workers: This category has citizens who have also not looked for work in the past month. But they have searched for jobs in the past year. Thus, they are not seen as unemployed. These workers want to have full-time jobs. But they feel that they will face discrimination, do not have the appropriate skills, or are past the right age.
US Unemployment Rate Chart by State in 2021
Historical US Unemployment Rate Chart
The US unemployment rate chart is a handy tool to find out about the unemployment rate in the country. This helps to measure the strength of the economy. Companies in the country look at this data to determine their future course of action regarding hiring.