Saturday, December 3, 2011

Chart of the Day - Unemployment rate still high on charts since the 1940s

The decline in the reported unemployment rate is "nice" - until you look at it in historical perspective. The folks at Chart of the Day have done that with a chart going back decades. Purely as a chart technician, I'd say the chart suggests there's "support" at 8%, and lower at 7% - certainly, the reported rate remains high. And that's even before the by-now well-known adjustments to reflect true unemployment (e.g., those underemployed, and those who aren't counted because they've dropped off unemployment compensation or stopped looking for work). For example, a major reason why the rate reported yesterday dropped was that over 300,000 people dropped off the "unemployed list" because they gave up, not because they landed a job! Maybe the real rate is at new highs, and only backtesting to prior levels now exceeded.

Keeping that in mind, take a look at what Chart of the Day shows in the bigger-picture perspective:
Chart of the Day - Unemployment rate since the 1940s
Today, the Labor Department reported that the unemployment rate declined significantly to 8.6% -- the lowest level in 32 months. For some perspective on the current state of the labor market, today's chart illustrates the unemployment rate since 1948. As today's chart illustrates, the unemployment rate has been generally trending lower. However, the pace of that overall downtrend has been significantly slower than what has typically occurred following previous peaks in the unemployment rate. Though, following the previous two recessions, it did take much longer than normal for the unemployment rate to peak. While the significant decline in the unemployment rate for the month of November is a positive step, it is worth noting that the current unemployment rate remains at a level that was surpassed only during two previous periods (1975 and 1982-83) over the last 60+ years.

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Quote of the Day
"Genius begins great works, labor alone finishes them." - Joseph Joubert

Events of the Day
December 10, 2011 - Nobel Prizes awarded (announced in October)

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