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September 9, 2004
Unemployment: Relative Comparisons
Depending on where you get the news you could come to the conclusion that the 5.4% unemployment rate was either a sign that the economy is roaring or that it's wheels are falling off.
So how does one evaluate the most recent employment numbers? A good place to start is to look at the most recent numbers relatively. One such measure is to compare the numbers historically.
The graph plots the unemployment rate for the last 30 years (courtesy of economagic). The pink bands represent recessions and from the graph it appears we are progressing along a normal recovery. Actually, the recession was relatively mild with unemployment hitting a peak of 6.3% in June of last year. That compares with unemployment peaking at a rate of 7.8% after the previous recession in the early 90's and a rate above 10% in the early 80's.
Another relative comparison is to look at the unemployment numbers in other countries. Two that reported unemployment figures from the EMU within the last week were Germany and Ireland. Germany reported unemployment of 10.6%, while in Ireland the rate was a mere 4.6%. While there are several factors that go into creating a strong economy, it is interesting to note where these countries rank in the 2004 Index of Economic Freedom. Germany, with the highest unemployment rate, ranked 18th in the "Mostly Free" category. Both the U.S.and Ireland were categorized as "Free" with the U.S. coming in 10th and Ireland ranking 5th among all countries.
Posted by Peter Mork at September 9, 2004 10:44 PM
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