2 Comments:

At 9:32 PM,  MiYao said...

It's not the rate of unemployment that concerns economists and markets, it's the sudden, unexpected jump in the rate. Direction and magnitude of change is what matters. You don't need high unemployment to have a recession, but a sudden jump along with other factors can signal a recession.

From 1992 through 2000 the unemployment rate wasn't static at 5.5%. The unemployment rate decreased every single year going from 7.9% to 3.7% in 2000. The direction of change was positive and the economy also boomed during that time. But when you get a sudden jump in the wrong direction, investors get the jitters for good reason. These are people whose living depends on anticipating what will happen in the economy.

Last time we had a jump like this in late 2001, it was followed by a recession.

 

At 8:37 AM,  Anne42pt2 said...

I actually tend to agree with the previous comment. It is the relatively sudden bump up in the jobless rate that piques interest. To me, this is an item of interest, but not of fear. "Surge" is a bit dramatic.

Of course, I view recessions and just about anything that the economy does (short of a total 1929 nosedive)as a correction.

I believe it is, as the yogis say of their own art, also true of the economy: "after the expansion, we must have the contraction."

 

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