The FRED Blog has discussed the four possible reasons for being (and being categorized as) unemployed: From most to least prevalent, they are involuntarily losing a job, voluntarily leaving a job, looking for work after being out of the labor force for a while, and looking for work for the first time.
The FRED graph above shows data from the US Bureau of Labor Statistics breaking down the headline unemployment rate into these four reasons. The data are stacked to easily observe the change in the unemployment rate, and we can see a gradual rising trend between April 2023 and August 2024.
Recent research by Maximiliano A. Dvorkin and Serdar Ozkan at the St. Louis Fed offers new insights into unemployment flows during that period. They find that more-frequent job separations are the main reason behind the rising unemployment rate. Moreover, their research puts this trend in context by comparing inflows and outflows in the labor market during three different recessions: 1990-91, 2001, and 2007-09. They conclude that upticks in the proportion of people losing their jobs have been observed before the start of past recessions and that keeping an eye on labor dynamics may provide an early indication of a change in broad economic conditions.
For more about this and other research, visit the publications page of the St. Louis Fed’s website, which offers an array of economic analysis and expertise provided by our staff.
How the graph was created: Browse FRED data by Release and navigate to “Employment Situation > Release Tables > Current Population Survey (Household Data) > Table A-11. Unemployed persons by reason for unemployment.” Next, click on the boxes to the left of three categories of “Unemployed as a Percent of the Civilian Labor Force” at the bottom of the page. Last, click on the “Add to Graph” button.
Suggested by Diego Mendez-Carbajo.
