How low can the unemployment rate go?

Date posted: May 15, 2012

The unemployment rate is finally going in the right direction — down. But it is still uncomfortably high, being over 8 percent nationally and higher than 9 percent in North Carolina. Do economists have any estimates of just how far the rate can be pushed down? N.C. State University economist Mike Walden responds.

“Well …, a couple of economists tried to estimate this. And what they did is they looked back in recent economic history and they looked at how low the unemployment rate went before a new recession began. Unfortunately recessions come and go. We will have another recession down the road. We certainly don’t hope it’s soon. But, for example, if you look at after the 2001 recession, the unemployment rate got down to 6 percent nationally. Before then we hit the new recession beginning in 2007. After the 1990-91 recession it got down to 4.7 percent. After the 1981-82 recession the national unemployment rate got down to 5.1 percent. So there appears to be a little bit of a pattern here in terms of the low unemployment rate in recent years actually being higher.

“What these two economists did who have estimated … how far it could get down this time is they looked at a lot of data, a lot of trends. Their answer is that they think national unemployment, which right now is over 8 percent, could get as low as 6.5 percent. That’s their estimate for the absolute bottom before we hit another recession. Obviously, we’d like it to be lower. But at least what these economists are forecasting is that it will still trend down in the near term.”

Share this story:
Share on FacebookTweet about this on TwitterShare on Google+Pin on Pinterest

Category:

Tags: ,

Comments are closed.

Privacy Statement | University Policies | Contact