The scars of the Great Recession
The graph above shows the unemployment rate (right axis) and the average duration of unemployment (in weeks, left axis). It’s well known that the unemployment rate is currently very low. However, the duration of unemployment since the Great Recession has never been longer.* What’s going on?
The graph below has an answer. The share of long-term unemployment is significantly higher than in any other post-WWII period. Indeed, those unemployed for more than 6 months (in green) still represent over 20% of the unemployed, after a peak of over 45% in 2011. This share increases after recessions, but the most recent recession was deeper and much longer than the others. It’s also well-known that the long-term unemployed have a much harder time finding a job, leading to a catch-22 situation for them. And thus their numbers still persist at a high level.
How these graphs were created: Search for unemployment duration and click on the series name. From the “Edit Graph” panel, open the “Add Line” tab and search for “unemployment rate.” Open the “Format” tab and place the axis for the second line on the right. For the second graph, look at the notes for the duration series, where there is a link to the release table. From there, check the relevant series, click on and “Add to Graph.” From the “Edit Graph” panel, open the “Format” tab, change graph type to “Area, Stacked,” and finally move the “less than 5 weeks” series up so that they are all properly ordered.
*At least in the postwar era.
Suggested by Christian Zimmermann.
The latest recession was different from other postwar recessions. One striking feature is how the various durations of unemployment have changed. The fraction of long-term unemployed (>26 weeks) had never been the largest. But now it is the largest by far! Until now, the fraction of short-term unemployed (<5 weeks) has always been the largest. Now it’s second or even third. What’s so peculiar about this recession? Is this a new regime? To truly answer these questions, we most likely have to wait for new data to come in. FRED offers various tools to stay connected. 1. You can create a dashboard that allows you to track statistics. 2. You can place a widget on your web page that reveals the latest data for up to six series. 3. You can subscribe to email alerts for the latest updates of you favorite series. 4. You can put the relevant series in an Excel spreadsheet and refresh the data with a single click (thanks to our Excel add-in). 5. You can come back to this blog post from time to time, and its graph will automatically update with the latest data.
How this graph was created: Find the release table for unemployed persons by duration of unemployment, select the four relevant series at the bottom, and add them to the graph.
Suggested by George Essig
View on FRED, series used in this post: