Since, 1929, the U.S. unemployment rate has fluctuated in response to historical events, economic happenings, and policies.
Unemployment typically rises during recessions and falls during periods of economic prosperity. The rate declined during several U.S. wars, particularly during World War II. The unemployment rate rose during the recessions that followed those wars.
Key Takeaways
- The unemployment rate is the percentage of workers who do not have a job but are a part of the labor force. It has historically been impacted by economic events and policies.
- Since 1929, wars, recessions, and a global pandemic have driven unemployment up. At other times, the health of the U.S. economy has sent unemployment to record heights.
- When looking at the unemployment rate by year, you can see how it compares to GDP and inflation at the time.
Here's how the unemployment rate has changed throughout history and how it has compared to gross domestic product (GDP) and inflation.
How Unemployment Tracks Recessions
The unemployment rate is the percentage of unemployed workers in the labor force. It's a key indicator of the health of the country's economy.
Unemployment tracks the business cycle. Recessions are part of that cycle and can cause high unemployment.
Businesses often lay off workers and, without an income, those jobless workers have less money to spend. Lower consumer spending reduces business revenue, which forces companies to cut more payroll. This downward cycle can be devastating to individuals and the economy.
The highest rate of U.S. unemployment was 24.7% in 1933, during the Great Depression. Unemployment remained above 14% from 1931 to 1940. It remained in the single digits until September 1982 when it reached 10.1%.
Note
If you’re looking for work after a recession, you’ll likely find the going is still tough. It might take several months before the unemployment rate falls.
During the Great Recession, unemployment reached 10% in October 2009. In 2020, it reached double digits again (14.7%) in April when the U.S. was dealing with a pandemic and recession.
How the US Fights High Unemployment
The Federal Reserve uses expansionary monetary policy to lower interest rates. Congress uses fiscal policy to cr-eate jobs and provide extended unemployment benefits.
The unemployment rate typically falls during the expansion phase of the business cycle. The lowest unemployment rate in modern history was 1.2% in 1944.
Note
It may seem counterintuitive to think unemployment can get too low, but it can.
The Federal Reserve does not target specific figures for the natural rate of unemployment, but simply seeks "the maximum level of employment" as part of its long-term financial policy goals.
The unemployment rate is a lagging indicator. When an economy begins to improve after a recession, for example, the unemployment rate may continue to worsen for some time. Many companies hesitate to hire workers until they regain confidence in the recovery, and it may take several quarters of economic improvement before they feel confident that the recovery is real.
US Unemployment Rates by Year
The U.S. Bureau of Labor Statistics (BLS) has measured unemployment since the stock market crash of 1929.
Gross domestic product (GDP) is the measure of economic output by a country. When the unemployment rate is high, there are fewer workers. That could lead to less economic output and a lower rate of GDP.
When inflation rises, the prices of goods and services go up, making them more expensive. If there is a high rate of unemployment at the same time, this could cause issues for those without an income since they may be struggling to afford basic necessities.
The following table shows how unemployment, GDP, and inflation have changed by year since 1929. Unless otherwise stated, the unemployment rate is for December of that year. Unemployment rates for the years 1929 through 1947 were calculated from a different BLS source due to current BLS data only going back to 1948. GDP is the annual rate and inflation is for December of that year and is the year-over-year rate.
| Year | Unemployment Rate (December) | Annual GDP Growth | Inflation (December, YOY) | Notable Events |
|---|---|---|---|---|
| 1929 | 3.2% | NA | 0.6% | Market crash |
| 1930 | 8.7% | -8.5% | -6.4% | Smoot-Hawley |
| 1931 | 15.9% | -6.4% | -9.3% | Dust Bowl |
| 1932 | 23.6% | -12.9% | -10.3% | Hoover's tax hikes |
| 1933 | 24.9% | -1.2% | 0.8% | FDR's New Deal |
| 1934 | 21.7% | 10.8% | 1.5% | Depression eased, thanks to New Deal |
| 1935 | 20.1% | 8.9% | 3.0% | |
| 1936 | 16.9% | 12.9% | 1.4% | |
| 1937 | 14.3% | 5.1% | 2.9% | Spending cuts |
| 1938 | 19.0% | -3.3% | -2.8% | FLSA startsminimum wage |
| 1939 | 17.2% | 8.0% | 0% | Drought ended |
| 1940 | 14.6% | 8.8% | 0.7% | U.S. draft |
| 1941 | 9.9% | 17.7% | 9.9% | Pearl Harbor |
| 1942 | 4.7% | 18.9% | 9.0% | Defense spending tripled |
| 1943 | 1.9% | 17.0% | 3.0% | Germany surrendered at Stalingrad |
| 1944 | 1.2% | 8.0% | 2.3% | Bretton Woods |
| 1945 | 1.9% | -1.0% | 2.2% | War ends. Min wage $0.40 |
| 1946 | 3.9% | -11.6% | 18.1% | Employment Act |
| 1947 | 3.6% | -1.1% | 8.8% | Marshall Plannegotiated |
| 1948 | 4.0% | 4.1% | 3.0% | Truman re-elected |
| 1949 | 6.6% | -0.6% | -2.1% | Fair Deal;NATO |
| 1950 | 4.3% | 8.7% | 5.9% | Korean War;Min wage $0.75 |
| 1951 | 3.1% | 8.0% | 6.0% | Expansion |
| 1952 | 2.7% | 4.1% | 0.8% | Expansion |
| 1953 | 4.5% | 4.7% | 0.7% | Korean War ended |
| 1954 | 5.0% | -0.6% | -0.7% | Dow returned to 1929 level |
| 1955 | 4.2% | 7.1% | 0.4% | Unemployment fell |
| 1956 | 4.2% | 2.1% | 3.0% | Minimum wage $1.00 |
| 1957 | 5.2% | 2.1% | 2.9% | Recession |
| 1958 | 6.2% | -0.7% | 1.8% | |
| 1959 | 5.3% | 6.9% | 1.7% | Expansion |
| 1960 | 6.6% | 2.6% | 1.4% | Recession |
| 1961 | 6.0% | 2.6% | 0.7% | JFK;Min wage $1.15 |
| 1962 | 5.5% | 6.1% | 1.3% | Cuban Missile Crisis |
| 1963 | 5.5% | 4.4% | 1.6% | LBJ;Min wage $1.25 |
| 1964 | 5.0% | 5.8% | 1.0% | Tax cut |
| 1965 | 4.0% | 6.5% | 1.9% | U.S. enters Vietnam War |
| 1966 | 3.8% | 6.6% | 3.5% | Expansion |
| 1967 | 3.8% | 2.7% | 3.0% | Min wage $1.40 |
| 1968 | 3.4% | 4.9% | 4.7% | Min wage $1.60 |
| 1969 | 3.5% | 3.1% | 6.2% | Nixon took office |
| 1970 | 6.1% | 0.2% | 5.6% | Recession |
| 1971 | 6.0% | 3.3% | 3.3% | Emergency Employment Act;Wage-price controls |
| 1972 | 5.2% | 5.3% | 3.4% | OngoingStagflation;Watergate break-in |
| 1973 | 4.9% | 5.6% | 8.7% | CETA ; Gold standard ; Vietnam War ended |
| 1974 | 7.2% | -0.5% | 12.3% | Nixon resigns; Min. wage $2.00 |
| 1975 | 8.2% | -0.2% | 6.9% | Recession ended |
| 1976 | 7.8% | 5.4% | 4.9% | Expansion |
| 1977 | 6.4% | 4.6% | 6.7% | Carter took office |
| 1978 | 6.0% | 5.5% | 9.0% | Fed raised rate to 20% to stop inflation |
| 1979 | 6.0% | 3.2% | 13.3% | |
| 1980 | 7.2% | -0.3% | 12.5% | Recession |
| 1981 | 8.5% | 2.5% | 8.9% | Reagantax cuts; Min. wage $3.35 |
| 1982 | 10.8% | -1.8% | 3.8% | Job Training Partnership Act; Garn-St.Germain Act |
| 1983 | 8.3% | 4.6% | 3.8% | Reagan increased military spending |
| 1984 | 7.3% | 7.2% | 3.9% | |
| 1985 | 7.0% | 4.2% | 3.8% | Expansion |
| 1986 | 6.6% | 3.5% | 1.1% | Tax cuts |
| 1987 | 5.7% | 3.5% | 4.4% | Black Monday |
| 1988 | 5.3% | 4.2% | 4.4% | Fed raised rate |
| 1989 | 5.4% | 3.7% | 4.6% | Reforms made to addressS&L Crisis |
| 1990 | 6.3% | 1.9% | 6.1% | Recession |
| 1991 | 7.3% | -0.1% | 3.1% | Desert Storm; Min. wage $4.25 |
| 1992 | 7.4% | 3.5% | 2.9% | NAFTAdrafted |
| 1993 | 6.5% | 2.8% | 2.7% | Omnibus Budget Reconciliation Act |
| 1994 | 5.5% | 4.0% | 2.7% | School to Work Act |
| 1995 | 5.6% | 2.7% | 2.5% | Expansion |
| 1996 | 5.4% | 3.8% | 3.3% | Welfarereform |
| 1997 | 4.7% | 4.4% | 1.7% | Min. wage $5.85 |
| 1998 | 4.4% | 4.5% | 1.6% | LTCM crisis |
| 1999 | 4.0% | 4.8% | 2.7% | Euro;Serbian airstrike |
| 2000 | 3.9% | 4.1% | 3.4% | NASDAQhit record high |
| 2001 | 5.7% | 1.0% | 1.6% | Bush tax cuts;9/11 attacks |
| 2002 | 6.0% | 1.7% | 2.4% | War on Terror |
| 2003 | 5.7% | 2.8% | 1.9% | JGTRRA |
| 2004 | 5.4% | 3.9% | 3.3% | Expansion |
| 2005 | 4.9% | 3.5% | 3.4% | Bankruptcy Abuse Prevention Act;Katrina |
| 2006 | 4.4% | 2.8% | 2.5% | Expansion |
| 2007 | 5.0% | 2.0% | 4.1% | |
| 2008 | 7.3% | 0.1% | 0.1% | Min. wage $6.55;Financial crisis |
| 2009 | 9.9% | -2.6% | 2.7% | ARRA;Minimum wage $7.25;Jobless benefits extended |
| 2010 | 9.3% | 2.7% | 1.5% | Obama tax cuts |
| 2011 | 8.5% | 1.5% | 3.0% | 26 months of job losses by July;Debt ceilingcrisis; Iraq War ended |
| 2012 | 7.9% | 2.3% | 1.7% | QE;10-year rate at 200-year low;Fiscal cliff |
| 2013 | 6.7% | 1.8% | 1.5% | Stocks up 30%; Long term = 5%unemployment |
| 2014 | 5.6% | 2.3% | 0.8% | Unemployment at 2007 levels |
| 2015 | 5.0% | 2.7% | 0.7% | Natural rate |
| 2016 | 4.7% | 1.7% | 2.1% | Presidential race |
| 2017 | 4.1% | 2.3% | 2.1% | Dollar weakened |
| 2018 | 3.9% | 2.9% | 1.9% | Trump tax cuts |
| 2019 | 3.6% | 2.3% | 2.3% | Goldilocks economy |
| 2020 | 6.7% | -3.4% | 1.4% | COVID-19 pandemic and recession |
| 2021 | 3.9% | 5.7% | 7.0% | COVID-19 pandemic and recovery |
Frequently Asked Questions (FAQs)
How is the unemployment rate calculated?
The unemployment rate divides the number of unemployed workers by the total available workforce. In this equation, "unemployed workers" must be age 16 or older and must have been available to work full-time in the past four weeks. They must have actively looked for work during that time frame, as well, and temporarily laid-off workers don't count.
Which state has the highest unemployment rate?
At the end of 2022, the District of Columbia had the highest unemployment rate in the U.S., at 4.8%, respectively.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
U.S. Bureau of Labor Statistics. "Labor Force, Employment, and Unemployment, 1929-39: Estimating Methods." Page 2, Table 1.
U.S. Bureau of Labor Statistics. "Top Picks." Select "Unemployment Rate," Click "Retrieve Data," Select "1948 to 2022," Click "Go."
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Board of Governors of the Federal Reserve System. "Statement on Longer-Run Goals and Monetary Policy Strategy."
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Bureau of Economic Analysis. “National Income and Product Accounts Tables." Select "Table 1.1.1: Percent Change From Preceding Period in Real Gross Domestic Product.” Select "Modify," select "Annual," select "1930 A" as "First Year."
U.S. Bureau of Labor Statistics. "Unemployment Rates for States."
