Economic Growth and the Unemployment Rate
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[Excerpt] Despite the resumption of economic (output) growth in June 2009, the unemployment rate remains at an historically high level more than two years into the recovery from the 11th recession of the postwar period. The unemployment rate, which is the number of unemployed persons divided by the number of persons in the labor force, has settled at about 9.0% during the first three quarters of 2011. The stalled rebound of the labor market through September 2011 has prompted speculation about a double-dip recession and renewed calls for measures to stimulate the economy beyond those Congress has previously enacted. From a public policy perspective, the main driver of the unemployment rate is the pace of output growth. This report first examines the long-run relationship between the two economic variables and then narrows its focus to the periods of recovery from the postwar recessions.
unemployment; economic growth; recession