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# Economic Snapshot: Duration of Unemployment

## Current Economic Data

 Q1-’11 Q2-’11 Q3-’11 Q4-’11 Growth Rate—Real GDP 0.40% 1.30% 1.80% 2.8%* Inflation Rate—Consumer Price Index 5.20% 4.10% 3.10% 0.90% Civilian Unemployment Rate 9.00% 9.00% 9.10% 8.70%

SOURCE: GDP, Bureau of Economic Analysis; www.bea.gov. Unemployment and consumer price index, Bureau of Labor Statistics; www.bls.gov.

1. What causes the average duration of unemployment to change over time?

Changes in the business cycle cause the average duration of unemployment to rise and fall: It begins to rise during recessions, generally peaks following, and then declines as the economy improves, as seen in the graph below.

## Average (Mean) Duration of Unemployment (UEMPMEAN)

SOURCE: Bureau of Labor Statistics; www.bls.gov. Research: www.stlouisfed.org.

2. Based on the graph above, how does unemployment attributed to the most recent recession compare with that of past recessions?

The average duration of unemployment associated with the most recent recession is much higher (39 weeks) than that of past recessions. In the previous three recessions, the duration of unemployment remained below 20 weeks.

3. Based on the graph below, what is the relationship between educational attainment and unemployment rates?

A higher level of educational attainment is associated with a lower level of unemployment.

## U.S. Employment Rates Across Education Groups

(2000:Q1–2010:Q4, Ages 25+)

SOURCE: Bureau of Labor Statistics/Haver Analytics.

4. The most recent recession started in December 2007 and ended in June 2009. Although the unemployment rate increased for all groups during that time, which groups had the highest and lowest increases? Propose an explanation for the difference.

The No High School Diploma group experienced the greatest increase in unemployment (from roughly 6 percent to roughly 15 percent), and the College group experienced the least (from roughly 2 percent to roughly 5 percent). The difference is likely related to the skill level of each group and the type of jobs held by relatively low-skilled workers.

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