[Excerpt] Despite the resumption of economic (output) growth in June 2009, the unemployment rate remains at an historically high level more than three years into the recovery from the 11th recession of the postwar period. Not until the fourth quarter of 2012 did the unemployment rate drop below 8%, its lowest level since January 2009.
The persistently high unemployment rate is a cause of concern to Congress for a variety of reasons. Among them are the high rate’s deleterious impact on individuals’ economic well-being and the budget deficit due to lower revenue and higher expenditures. The slow rebound of the labor market has renewed calls in some quarters for measures to stimulate the economy beyond those Congress has previously enacted.
From a public policy perspective, the main driver of the unemployment rate is the pace of economic growth. This report first examines the long-run relationship between the two economic variables and then narrows its focus to the periods of recovery from the postwar recessions.