7 Warning Signs of a Looming Recession


3
Unemployment Bottoms Out
A super-low unemployment rate could also be the smoke before an economic fire. Bureau of Labor Statistics

At various points in 2018, the U.S. unemployment rate registered 3.7 percent, the lowest rate on record since 1969. That's great news for America's workers. As we mentioned earlier, low unemployment means employers have to raise wages to attract top talent in a tight job market. But recession watchers also know that a super-low unemployment rate could also be the smoke before an economic fire.

Historically, the U.S. economy has gone into recession nine months after the unemployment level reaches its lowest point or "trough." It makes sense that unemployment levels would start to rise in the lead up to a recession and spike during the worst of it. In 2009, at the height of the Great Recession, the U.S. unemployment rate hit 10 percent.

The hard part is knowing exactly when the unemployment rate has hit rock bottom. It's easy to look back on a 50-year graph and spot each trough and peak, but those movements are much harder to track in real time. That doesn't stop economists and investors from obsessively monitoring the weekly report of unemployment insurance claims looking for signs of a broader trend.

More to Explore