The unemployment rate is the percentage of unemployed workers in the labor force. It's a key indicator of the health of the country's economy. Unemployment typically rises during recessions and falls during periods of economic prosperity. It also declined during five U.S. wars, especially World War II.﻿﻿ The unemployment rate rose in the recessions that followed those wars.

COVID Pandemic Update The current U.S. unemployment rate had fallen to 8.4% in August after reaching a peak of 14.7% in April 2020.

The total number of unemployed is 13.55 million, 7.5 million more than August 2019.

In April, 23 million workers were let go from their jobs in response to the coronavirus pandemic

How Unemployment Tracks Recessions

Unemployment tracks the business cycle. Recessions cause high unemployment. Businesses lay off workers and jobless workers have less to spend as a result. Lower consumer spending reduces business revenue, which forces companies to cut more payroll. This downward cycle is devastating.

The highest rate of U.S. unemployment was 24.9% in 1933, during the Great Depression.﻿﻿ Unemployment remained above 14% from 1931 to 1940. It remained in the single digits until September 1982 when it reached 10.1%.﻿﻿ During the Great Recession, unemployment reached 10% in October 2009.

The government steps in when unemployment exceeds 6%. The Federal Reserve uses expansionary monetary policy to lower interest rates.﻿﻿ ​Congress uses fiscal policy to create jobs and provide extended unemployment benefits.

The unemployment rate falls during the expansion phase of the business cycle. The lowest unemployment rate was 1.2% in 1944.

It may seem counterintuitive to think unemployment can get too low, but it can.

The Federal Reserve says that the natural rate of unemployment falls between 3.5% and 4.5%.﻿﻿ If the rate falls any lower than that, the economy could experience too much inflation, and companies could struggle to find good workers that allow them to expand operations.

The unemployment rate is a lagging indicator.﻿﻿ When an economy begins to improve after a recession, for example, the unemployment rate may continue to worsen for some time. Many companies hesitate to hire workers until they regain confidence in the recovery, and it may take several quarters of economic improvement before they feel confident that the recovery is real.

If you’re looking for work after a recession, you’ll find the going is still tough. It might take several months before the unemployment rate falls.

U.S. Unemployment Rates by Year

The ​U.S. Bureau of Labor Statistics has measured unemployment since the stock market crash of 1929.﻿﻿ The following table shows how it has changed by year and why:﻿﻿ ﻿﻿ ﻿﻿