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How fast has the unemployment rate declined?


One way to compare recessions is to compare their unemployment rates, and the graph above includes the civilian unemployment rate for the four most recent business cycles. In this case, index values are used to show how the rate for each cycle changed in comparison with the highest rate that occurred in that cycle. (The graph shows each cycle’s unemployment rate relative to the highest rate in that cycle, which has an index value of 100.) None of the four rates seem to stand out; they all follow a similar path downward. But we know that the last cycle’s unemployment rate went higher than any of the others. So, that must mean the most recent unemployment rate declined faster in absolute terms (the actual percentage unemployment rate) because it hit a higher point than any of the other rates but still had a relative decline similar to the other rates.

How this graph was created: Find the “Civilian Unemployment Rate,” then select “Index (Scale value to 100 for chose period)” under Units. Then choose the data to match the highest unemployment rate in the previous cycle. Finally, check “Display integer periods” with values 0 and +60. Add the civilian unemployment rate three more times to the graph (it is preselected) while including the different dates that correspond to the highest value in each of these three earlier cycles.

Suggested by Christian Zimmermann

View on FRED, series used in this post: UNRATE


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