Publication Date

8-20-2010

Abstract

[Excerpt] By many accounts, the economic contraction that began in December 2007 is already over. The increase in real gross domestic product (GDP) in the third quarter of 2009, and GDP growth having remained positive thereafter, lends support to that view. Growth in GDP (i.e., the output of goods and services) is a key measure that the Business Cycle Dating Committee uses to officially designate the beginning and ends of recessions.

What may concern some policymakers as much or even more than whether the “Great Recession” has ended, however, is the outlook for the unemployment rate. Although the economy has been growing again, it may be a while before the unemployment rate begins to decline steadily. The rate may even continue rising for some time after the beginning of an expansion. The unemployment rate is considered a lagging indicator, meaning that its ups and downs happen some time after the ups and downs of other broad indicators of economic activity.

Not only might the unemployment rate be slow to fall at the beginning of an economic expansion, its rate of decline, or whether it declines at all, is likely to depend on the rate of GDP growth. It is possible for there to be above-zero real economic growth that is insufficient to prevent continued increases in the unemployment rate. This report examines the relationship between economic growth and the unemployment rate to anticipate possible future developments.

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Suggested Citation
Levine, L. (2010). Unemployment and economic recovery. Washington, DC: Congressional Research Service.
http://digitalcommons.ilr.cornell.edu/key_workplace/775

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