Unemployment in the US Now vs. a Year Ago
In early 2020, once the coronavirus outbreak was dubbed a pandemic, extreme measures were enacted around the globe. People were told to stay at home and not even go into work, and many businesses were effectively shut down. As a result, unemployment spiked dramatically in the springtime of 2020, hitting levels not seen since the Great Depression.
One year later, it’s encouraging to note that while the American economy is certainly not out of the woods as of yet, unemployment numbers are much better than in Spring of 2020. Why is this important, economically speaking? The unemployment rate is a figure relied on by economists because it is a very reliable lagging indicator. Unemployment is considered a lagging indicator because employers usually only reduce their headcount once revenue is already declining. Thus, economists can take note of rising unemployment figures to ascertain if and when economic decline (or recovery) is already underway.
Unemployment Through the Pandemic
The data from the above table is clear and unmistakable. At the onset of the coronavirus pandemic, in March 2020, the unemployment rate was a very benign 4.4%. Just a single month later, the rate had shot up by more than 10%, to 14.8%. This unemployment rate was both the highest rate and largest month-over-month increase in the history of Bureau of Labor Statistics data, which dates back to 1948. These two figures alone demonstrate just how swift and devastating the onset of the pandemic was to the American economy and the American worker.
Unemployment: Then and Now
Comparing last year’s unemployment numbers with this year’s can give even the non-economist a concrete look at whether or not the economy is improving, particularly for American workers.
The one positive to be taken from the historically awful April 2020 figure is that, thus far, it has been the high water mark for unemployment throughout the course of the pandemic. As of February 2021, unemployment has ticked down to its pandemic-era low, at just 6.2%. In fact, unemployment has steadily ticked down every month since April 2020, with the exception of the November-December 2020 period, when it remained flat at 6.7%.
Here are some noteworthy statistics regarding how the unemployment rate has changed from 2020 to 2021:
- Change in unemployment rate from April 2020 to February 2021: -8.6%
- Percentage change in unemployment rate from April 2020 to February 2021: -58.11%
As you can see, the unemployment rate has plummeted precipitously since its peak in April 2020. However, the economy is not quite out of the woods yet. While the employment situation has improved dramatically since April 2020, a more apt comparison, when speaking about a “return to normalcy,” would be to compare the current unemployment rate to what it was immediately prior to the outbreak of the pandemic, in February 2020. Here is how the numbers look in that comparison:
- Change in unemployment rate from February 2020 to February 2021: +2.7
- Percent change in unemployment rate from February 2020 to February 2021: +77.14%
By this comparison, the economy still has a lot of work to do to get back to pre-pandemic levels. However, based on the solid trend downwards in the unemployment rate over the past year, the economy seems to be slowly on the mend. With the recent passage of an additional $1.9 trillion in stimulus, these trends will hopefully continue to improve.
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