The big economic news today is that the unemployment rate unexpectedly fell. The rate dropped to 9.4% of the labor force, versus last month’s 9.5%. While any rate in this range is considered high, a move in the downward direction is a very good thing. This is particularly true when that drop is unexpected. In response, the stock market has surged today.
Because the unemployment rate is a lagging economic indicator, one would expect this rate to continue to climb even after the general economy improves. On average, the unemployment rate peaks 4.7 months after the end of a recession. This rate may continue to climb after a brief dip. However, the rate dropping for the first time since April of 2008 is one signal that the recession has ended, or will end in the near future. Good news!
Harli L. Palme, CFP®