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Understanding the Unemployment Picture

November 21, 2011
Christopher Waller

Presentation (.pdf)

In this “Dialogue with the Fed” held Nov. 21, 2011, Christopher Waller, senior vice president and director of Research, provided an overview of unemployment in the United States as part of his presentation on “Understanding the Unemployment Picture.” Julie Stackhouse, senior vice president of Banking Supervision and Regulation, moderated the question-and-answer session with the audience following the presentation, which featured Waller, St. Louis Fed economist David Andolfatto and former St. Louis Fed economist Natalia Kolesnikova.

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Comparing non-farm payroll statistics of the 2008-2009 recession against earlier recessions, Waller explained why 2008-2009 was called the “Great Recession.” He also showed how recessions in the U.S. between 1948 and the 1980s tended to show a sharp rise in unemployment that peaked right at the very end before falling sharply. However, this has not been the trend in recent recessions, including the Great Recession. He explored how well employment had responded to recent monetary and fiscal policies, including zero interest rates, low tax rates and close to $1 trillion in stimulus spending. While zero unemployment may seem like a reasonable and ethical goal, Waller also explained the reasons why it cannot be achieved due to the labor market being far too dynamic with the enormous flows in the labor market occurring at any given month. Millions of people move between employment, unemployment and nonparticipation, while tens of millions more change jobs or careers while remaining continually employed.