{"id":10488,"date":"2020-09-14T08:38:01","date_gmt":"2020-09-14T13:38:01","guid":{"rendered":"http:\/\/blog.uwsp.edu\/cps\/?p=10488"},"modified":"2020-09-21T09:01:34","modified_gmt":"2020-09-21T14:01:34","slug":"a-tale-of-two-crises-and-recoveries-financial-crisis-vs-covid-19-crisis-part-3-unemployment-before-and-during-the-crises","status":"publish","type":"post","link":"https:\/\/blog.uwsp.edu\/cps\/2020\/09\/14\/a-tale-of-two-crises-and-recoveries-financial-crisis-vs-covid-19-crisis-part-3-unemployment-before-and-during-the-crises\/","title":{"rendered":"A Tale of Two Crises\u2013and Recoveries: Financial Crisis vs. COVID-19 Crisis Part 3: Unemployment \u2013 Before and During the Crises"},"content":{"rendered":"\n

The Financial Crisis<\/em><\/h4>\n\n\n\n

The graph below shows the U.S. unemployment rate over the period 2001\u20132010. After reaching a peak unemployment rate of 6.3% in June 2003 during the recession following the turn of the century, the unemployment rate began a gradual decline and bottomed out at 4.4% in late 2006 and early 2007. Over a 40-month period, the unemployment rate had dropped 1.9% from 6.3% in June 2003 to 4.4% in October 2006. After hovering around 4.4%, the rate began to increase in June 2007 as the financial crisis began to unfold. From a low of 4.4% in May 2007, the growing financial crisis caused the unemployment rate to gradually increase and top out at 10.0% in October 2009. The unemployment rate increased 5.6% over a period of 29 months before the economic recovery of the financial crisis kicked in. <\/p>\n\n\n\n

Unemployment Rate (16 yrs. and older)<\/strong>
2001-2010<\/strong><\/p>\n\n\n\n

\"\"
Source: U.S. Bureau of Labor Statistics<\/em><\/figcaption><\/figure>\n\n\n\n

Once the economic recovery kicked\nin, the unemployment rate began a long gradual decline. The table below shows\nthe annual decline in the unemployment rate after peaking at 10.0% in October\n2009.<\/p>\n\n\n\n

December Unemployment Rate<\/strong>
(Source: Bureau of Economic Analysis)<\/em><\/p>\n\n\n\n
2010<\/strong> <\/td>2011<\/strong> <\/td>2012<\/strong> <\/td>2013<\/strong> <\/td>2014<\/strong> <\/td>2015<\/strong> <\/td>2016<\/strong> <\/td>2017<\/strong> <\/td>2018<\/strong> <\/td>2019<\/strong> <\/td><\/tr>
9.3 <\/td>8.5 <\/td>7.9 <\/td>6.7 <\/td>5.6 <\/td>5.0 <\/td>4.7 <\/td>4.1 <\/td>3.9 <\/td>3.5 <\/td><\/tr><\/tbody><\/table>\n\n\n\n

The unemployment rate reflects a\nlong, gradual, and generally consistent economic expansion following the\nfinancial crisis. The unemployment rate was not volatile; it was a gradual\ndecline throughout the decade following the financial crisis.<\/p>\n\n\n\n

The Covid-19 Crisis<\/em><\/h4>\n\n\n\n

The graph below shows the U.S.\nunemployment rate over the period 2010 \u2013 2020. The graph reflects what was\nindicated in the table above, that the unemployment rate gradually and\nconsistently declined throughout the decade following the financial crisis \u2013\nuntil 2020. The unemployment rate declined as the longest period of U.S.\neconomic growth began in July 2009 following the financial crisis and continued\nthrough February 2020. After peaking at 10.0% in October 2009, the unemployment\ngradually and constantly trekked lower until it bottomed out at 3.5% in late\n2019 and early 2020. <\/p>\n\n\n\n

Unemployment Rate (16 yrs. and older)<\/strong>
2010-2020<\/strong><\/p>\n\n\n\n

\"\"
Source: U.S. Bureau of Labor Statistics<\/em><\/figcaption><\/figure>\n\n\n\n

But the coronavirus changed things.\nThe arrival of the coronavirus in early 2020 prompted many businesses and\nstates to try to minimize the spread of the disease by preventing or limiting\nsocial contact, which included restricting economic activity in some degree,\nsuch as closing, reducing store hours, and\/or limiting customer volume at\nbusinesses.  It also meant many Americans\nbecame concerned for their ability to safely shop, travel, and spend at retail\nbusinesses. Consumer spending declined, and increasing unemployment resulted. The table below shows the 2020 unemployment\nrate through July.<\/p>\n\n\n\n

2020 Unemployment Rate: January through July<\/strong>
(Source: Bureau of Economic Analysis)<\/em><\/p>\n\n\n\n
January<\/strong> <\/td>February<\/strong> <\/td>March<\/strong> <\/td>April<\/strong> <\/td>May<\/strong> <\/td>June<\/strong> <\/td>July<\/strong> <\/td><\/tr>
3.6 <\/td>3.5 <\/td>4.4 <\/td>14.7 <\/td>13.3 <\/td>11.1 <\/td>10.2 <\/td><\/tr><\/tbody><\/table>\n\n\n\n

The impact of the coronavirus began\nto hit the U.S. economy in March, as the unemployment rate increased to 4.4 %\nfrom the 3.5% of February. Covid-19 had a major and dramatic impact in April,\nwith the unemployment rate skyrocketing to 14.7%. In two months, the rate had\nincreased by 11.2%, a much quicker and more significant increase than what\noccurred during the financial crisis. During the financial crisis, the\nunemployment rate increased by 5.6% over a period of 29 months, from a low of\n4.4% in May 2007 to a high of 10.0% in October 2009.<\/p>\n\n\n\n

As states began to relax economic\nrestrictions and businesses reopened, the unemployment rate began declining in\nMay. However, the July unemployment rate of 10.2% still exceeded the peak rate\nof 10.0% during the financial crisis. The big question \u2013 what happens next? If Covid-19\ncases and deaths decline in the fall, the unemployment rate will also likely decline.\nIf Covid-19 cases and deaths increase in the fall, unemployment may increase\nonce again. Time will tell.<\/p>\n\n\n\n

For\nfurther information:<\/p>\n\n\n\n

  1. Unemployment Rate Data from the Bureau of Labor Statistics: Bureau of Labor Statistics<\/a>
    <\/li><\/ol>\n\n\n\n
    \"CBEI<\/figure><\/div>\n\n\n\n

    CBEI Series: A Tale of Two Crises\u2013and Recoveries: Financial Crisis vs. COVID-19 Crisis<\/strong>
    Part 1: Causes and Cures<\/a>
    Part 2: Economic Growth \u2013 Before and During the Crises<\/a>
    Part 3: Unemployment \u2013 Before and During the Crises<\/a>
    Part 4: The Federal Reserve and Interest Rates<\/a>



    <\/p>\n\n\n\n

    <\/figure>\n\n\n\n
    <\/figure>\n\n\n\n
    \"Kevin<\/figure>
    \n

    Kevin Bahr is a professor emeritus of finance and chief analyst of the Center for Business and Economic Insight<\/a> in the Sentry School of Business and Economics at the University of Wisconsin-Stevens Point. <\/p>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

    The Financial Crisis The graph below shows the U.S. unemployment rate over the period 2001\u20132010. After reaching a peak unemployment rate of 6.3% in June 2003 during the recession following the turn of the century, the unemployment rate began a gradual decline and bottomed out at 4.4% in late 2006 and early 2007. Over a […]<\/p>\n","protected":false},"author":136,"featured_media":10470,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,7,527,12],"tags":[124,532,305,342,343,344],"_links":{"self":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts\/10488"}],"collection":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/users\/136"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/comments?post=10488"}],"version-history":[{"count":7,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts\/10488\/revisions"}],"predecessor-version":[{"id":10517,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts\/10488\/revisions\/10517"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/media\/10470"}],"wp:attachment":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/media?parent=10488"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/categories?post=10488"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/tags?post=10488"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}