The Corner

Unemployment and Growth

We shouldn’t expect the numbers to mirror each other perfectly. Growth can be strong while the unemployment rate goes up. For example, some workers might be too discouraged during a recession to apply for a job–and if they’re not looking for work, they don’t count in the unemployment rate. The beginning of a recovery might cause them to look for work and thus enter the rate calculation. Or, at the end of a boom, employers might keep hiring because they haven’t realized that consumer spending is starting to go down. There are all sorts of reasons that unemployment and growth numbers might seem discordant without there being anything especially wrong with the economy.

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