Sunday, January 28, 2007

Unemployment - A Lagging or Coincident Indicator

In the last two recessions unemployment was a lagging indicator peaking approximately 18 months after the recession officially ended. In the four recessions between 1970 and 1982 unemployment was a coincident indicator, starting to rise with the recession and pretty much peaking as the economy was just starting to recover. In no instances was unemployment a leading indicator.

The chart speaks for itself.



The above chart thanks to Bart at NowAndFutures.
(Click on chart for an enhanced view)

Conclusion

Those expecting some sort of huge advance warning in unemployment stats in advance of the next recession are unlikely to find it.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

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