Since 1960, the average unemployment rate in the United States has been about 6%. Reflecting the business cycle, unemployment has fluctuated over time. For example, unemployment skyrocketed in April 2020 during the early days of the pandemic. A significant drop followed.
Where we are
Let's look at the state of the U.S. economy in August 2023.
The unemployment rate in July 2023 was 3.5%, representing a 40-year low, despite record-high inflation, Russia's war in Ukraine, and other macroeconomic headwinds.
Monthly job numbers are beating expectations, inflation is slowing, and consumer spending remains strong despite rising interest rates. All show up in the unemployment numbers since those employed in the factor market become consumers in the product market.
The chart below is interactive, so feel free to explore.