Comparison of Unemployment Rate to Inflation and GDP Since 1929

Author : Steven De Nazareth

Updated : March 7th, 2018

When it comes to the unemployment rate in America, it is based on the percentage of the total unemployed labor force throughout the country. This helps in reviewing the country’s economy through the years. With this, we understand that unemployment rises during recessions and falls on the rebound. You should know that unemployment declined during the 5 US wars and mainly during World War II. But quickly after the wars ended, there was a spike in recession. During the Great Depression, America faced its highest rate of US unemployment at 24.9 percent in 1933. While in 1931 to 1940, unemployment was more than 14 percent and remained in single digits till 1982 when it rose to 10.8 percent. It was during the Great Recession of 2009 that the annual unemployment rate reached 9.9 percent in 2009.

Comparison of Unemployment Rate to Inflation and GDP

You should know that the lowest unemployment rate was 1.2 percent in 1944. But, you should know that unemployment can get lower based on economic policies and the outcome of companies gaining a foothold in new countries. This means that for a healthy economy, there should be a natural rate of unemployment that should follow.
This is usually because people move before they settle down in their new job. Otherwise, they get retained for a better job or stay unemployed and look out for work and wait for the right job. Even when the unemployment rate is 4 percent, it can be tough for companies to expand since they would have a hard time recruiting new good workers.

Unlike previous years, unemployment is now at a 44 year low at just 4.1% with several proactive measures brought in to ensure a higher minimum wage and employment opportunities for all.

Since unemployment cycles coincide with business cycles, job employment solely depends on whether there are enough good candidates to fill these vacancies. You should know that slow growth hampers employment and in fact causes high unemployment. With the decline in the gross domestic product, businesses will have to lay off workers. This will make jobless workers spend less. Now with lower consumer spending, there is a significant reduction in business revenue in this time period. This forces several companies to make more payroll cuts to reduce their costs and the downward cycle on workers is simply devastating.

Remember that unemployment rate is used as a lagging indicator. What this means is that it continues to worsen even as economic growth improves. Companies are hesitant about hiring workers back only when there are sustainable growth and a stable upward trend. That means that when the unemployment rate reaches 6 percent, the government will have to step in. Based on the turn of events the Federal Reserve uses expansionary monetary policy and will lower the federal funds rate. When the unemployment continues, Congress will step in to use its fiscal policy. It can create jobs for public work projects. It can also stimulate demand by providing extended unemployment benefits. The main way to ensure a healthy economic growth rate is by ensuring that there is a steady increase by 2-3% to create 150,000 jobs.

Just so you know! There are only two ways to get a country back on track.

Countries either choice the usual route of a monetary policy which is a quick fix where money is pumped in to drive growth. Otherwise, the more difficult fiscal policy is used to stimulate the economy with tax spends.

Monetary policy is usually the first solution for a quick and effective method. A lower interest rate will make it easier for families to borrow and solve their needs. This includes items like homes, cars, and electronics. It will stimulate enough demand to put the economy back on track. With a lower interest rate, your business can borrow at a lesser rate. This allows them the capital to hire more workers to meet the growing demand.

If all measures under this stimulus fail then it will mean that the government needs to make rate cuts and feed the economy with increased taxes to boost businesses. This helps businesses make more money from people that buy into their products once they have the disposable income to make their purchases.

A second method is by using the Fiscal policy. This is done by increasing or cutting taxes to stimulate the economy. With an expansionary fiscal policy, there will be a slower time for it to come into effect. Both Congress and the President have to agree on the next steps that follow. This can be more effective when it is executed. This will give the government some teeth to turn things around. The main thing is to gain the confidence of the people by convincing them of a better future. Cutting taxes works in the same manner as reducing interest rates. Both help businesses and consumers to spend more. This increase in demand will provide businesses with more money to invest and hire more workers. Government spending usually takes the form of creating jobs. When the government hires employees, they can do so directly or with contracts through companies to provide services. This provides customers with cash to buy more essential products.

In order to best judge the situation across the length and breadth of the US, you should weigh the unemployment rate against GDP growth and inflation. You will find a table below representing unemployment since 1929 when the stock market crashed. This table compares the unemployment rate, GDP growth, and inflation.

U.S. Unemployment Rate Over The Last 89 Years

Year Unemployment Rate GDP Growth Inflation
1929 3.2% NA 0.6%
1930 8.7% -8.5% -6.4%
1931 15.9% -6.4% -9.3%
1932 23.6% -12.9% -10.3%
1933 24.9% -1.3% 0.8%
1934 21.7% 10.8% 1.5%
1935 20.1% 8.9% 3.0%
1936 16.9% 12.9% 1.4%
1937 14.3% 5.1% 2.9%
1938 19.0% -3.3% -2.8%
1939 17.2% 8.0% 0%
1940 14.6% 8.8% 0.7%
1941 9.9% 17.7% 9.9%
1942 4.7% 18.9% 9.0%
1943 1.9% 17.0% 3.0%
1944 1.2% 8.0% 2.3%
1945 1.9% -1.0% 2.2%
1946 3.9% -11.6% 18.1%
1947 3.9% -1.1% 8.8%
1948 4% 4.1% 3.0%
1949 6.6% -0.5% -2.1%
1950 4.3% 8.7% 5.9%
1951 3.1% 8.1% 6.0%
1952 2.7% 4.1% 0.8%
1953 4.5% 4.7% 0.7%
1954 5% -0.6% -0.7%
1955 4.2% 7.1% 0.4%
1956 4.2% 2.1% 3.0%
1957 5.2% 2.1% 2.9%
1958 6.2% -0.7% 1.8%
1959 5.3% 6.9% 1.7%
1960 6.6% 2.6% 1.4%
1961 6% 2.6% 0.7%
1962 5.5% 6.1% 1.3%
1963 5.5% 4.4% 1.6%
1964 5% 5.8% 1.0%
1965 4% 6.5% 1.9%
1966 3.8% 6.6% 3.5%
1967 3.8% 2.7% 3.0%
1968 3.4% 4.9% 4.7%
1969 3.5% 3.1% 6.2%
1970 6.1% 0.2% 5.6%
1971 6% 3.3% 3.3%
1972 5.2% 5.2% 3.4%
1973 4.9% 5.6% 8.7%
1974 7.2% -0.5% 12.3%
1975 8.2% -0.2% 6.9%
1976 7.8% 5.4% 4.9%
1977 6.4% 4.6% 6.7%
1978 6% 5.6% 9.0%
1979 6% 3.2% 13.3%
1980 7.2% -0.2% 12.5%
1981 8.5% 2.6% 8.9%
1982 10.8% -1.9% 3.8%
1983 8.3% 4.6% 3.8%
1984 7.3% 7.3% 3.9%
1985 7% 4.2% 3.8%
1986 6.6% 3.5% 1.1%
1987 5.7% 3.5% 4.4%
1988 5.3% 4.2% 4.4%
1989 5.4% 3.7% 4.6%
1990 6.3% 1.9% 6.1%
1991 7.3% -0.1% 3.1%
1992 7.4% 3.6% 2.9%
1993 6.5% 2.7% 2.7%
1994 5.5% 4.0% 2.7%
1995 5.6% 2.7% 2.5%
1996 5.4% 3.8% 3.3%
1997 4.7% 4.5% 1.7%
1998 4.4% 4.5% 1.6%
1999 4% 4.7% 2.7%
2000 3.9% 4.1% 3.4%
2001 5.7% 1.0% 1.6%
2002 6% 1.8% 2.4%
2003 5.7% 2.8% 1.9%
2004 5.4% 3.8% 3.3%
2005 4.9% 3.3% 3.4%
2006 4.4% 2.7% 2.5%
2007 5.0% 1.8% 4.1%
2008 7.3% -0.3% 0.1%
2009 9.9% -2.8% 2.7%
2010 9.3% 2.5% 1.5%
2011 8.5% 1.6% 3.0%
2012 7.9% 2.2% 1.7%
2013 6.7% 1.7% 1.5%
2014 5.6% 2.6% 0.8%
2015 5.0% 2.9% 0.7%
2016 4.7% 1.5% 2.1%
2017 4.1% N.A. N.A.

US Inflation Rate

When it comes to the inflation rate, it is the percentage change in prices from one year to the next. These changes result in a business cycle. The first phase is the expansion where growth is positive and the country can see a 2% inflation. When the economy expands beyond 3 percent, it will create an asset bubble. The second phase is the peak when the expansion ends and contraction begins. Well in the third phase, you will find a contraction which results in a recession. Inflation usually falls below 2.0 percent and then deflation looms. The fourth phase is called the trough and this is the month when the contraction ends and the expansion begins. You should know that inflation responds to monetary policy that is enacted by the Federal Reserve. The Federal Reserve will focus its attention on the core inflation rate and will exclude things like volatile gas and food prices. The Fed sets a target inflation rate of two percent. If the core rate rises much above that, the Fed will execute a contracting monetary policy which increases interest rates and shuts down demand and thereby lowers prices.

US Records 10 Years with 3 percent growth

US unemployment

For a record 10 straight years, the United States has had 3 percent growth in Gross Domestic Product based on data by the Bureau of Economic Analysis. In 85 years since the BEA’s existence, the annual change in real GDP there was only one ten-year stretch between 2006 to 2015. This is because real annual growth in GDP peaked in 2006 at 2.7 percent. After which it has never been this high again. The last recession ended in June 2009. In 6 calendar years from 2010 to 2015, real annual GDP growth has never exceeded the 2.5 percent it reached in 2010. The longest consecutive stretch of years in which the US saw real growth by 3 percent or better was a seven-year period between 1983 to 1989. The second longest period was a growth of 3 percent between 1939 to 1944 during World War II. In the last two years, annual growth has been stagnant at 2.44 percent. In the fourth quarter from 2016 to 2018, it is projected to grow only by 2.7, 2.5 and 2.4 percent.

This primarily means that a steady growth rate of 3 percent is good for the economy. But, unless there is higher growth the economy will tend to stagnate and the number of jobs that are open for new faces will not grow significantly and this will create a problem if the number of new openings does not increase year-on-year, the unemployment rate does not fall further. If it depends solely on government policy through correction to make America continue its growth trajectory which does not rely solely on government jobs and contracts.

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  1. I applied for unemployment on 8-1 and was approved. I received my letter of eligibility and debit card about a week ago. I did not file my intitial bi weekly claim because I missed the deadline by 1 day (didn’t realize they would be closed on Saturday). When I logged on it said I would have to reopen a claim because mine had been closed. I filled out the online form to deactivate the claim. My question is this: will I have another waiting week? And will unemployment have to contact my employer all over again to verify my wages and go through the entire process all over again or will they just reopen the claim with a new date window to file?

  2. Lost my job in 10/2018 due to plant closure, collected vacation and severance pay. Opened a claim in 1/2019. Got an on the job training job through career link in 5/2019 worked one week and became very sick and was off for two weeks VA could not find anything wrong but gave me medication for the symptoms and an excuse to return to work, prior to returning got a call from my recruiter at career link telling me the position was filled so i did not return. Reopened my claim, a few weeks later got a letter informing me the employer had appealed and said i did not return, had a hearing and the employer did not show but i lost and got a 2500.00 over payment. Got a temp job through an agency but have only worked 4 days in two weeks. Reopened my claim and was told i need to earn 2604.00 from current employer before it can be opened, did i do something wrong? Still applying for work but am days away from losing everything, need income to pay bills. PLEASE HELP

    1. Rodney,

      Your eligibility to claim UI benefits depends on multiple factors including monetary eligibility. If you’ve been officially told about the shortage of earnings, there’s nothing much one can do. If you’re still confident of winning the appeal, please make a strong case.

      1. I live in KY but my base wages were from earnings in GA when I lived there. I’ve exhausted my benefits in KY. Am I able to now file through GA since my earnings through 10/18 came from there?

        1. Dee,

          As much as I am aware, Unemployment Insurance is a one time cycle. Please call the Unemployment Office in GA for more.

  3. The hours at work have been cut due to lack of business for every department.
    So all full-time positions are now part-time.
    How do I file for partial unemployment?
    The only options I see (in Texas) are for full unemployment.

    1. Eric,

      You should be able to claim partial UI benefits. Please consider applying online until full hours are restored.

    1. William,

      If everything goes well, it should not take more than 7-10 business days (waiting week). Please call the Claims Center for more.

  4. I was employed by a VA company for 5 years, my contract ended yesterday (07/31/19), however, I worked remotely for those 5 years and live in FL, which state do I apply to for my unemployment benefits?

    1. Oscar,

      Please check with your employer if they remitted UI taxes into the system. Contract workers are generally not eligible.

        1. Oscar,

          In that case, please go ahead and apply if your employer remitted UI taxes into the system.

    2. You apply in Virginia…however, I worked seasonally and they used a ‘quarter’ that was empty, so even though my employer paid in, I only got a 1/3 of what I should have received. Figured that out later :/ They will also question WHY you aren’t able and available to work IN Virginia. They froze my account for about a month.

  5. I worked 37 years with the same company in Texas. On July 2nd of 2018, I was let go due to workforce reduction. I signed up for benefits several months later and now have drawn my 26 weeks of benefit. Is there any program currently open in Texas or federally that will extend additional money while job seeking?

    1. Lonnie,

      The E.U.C(Emergency Unemployment Compensation) remains expired. There is no extension available. Please inquire further with the labor authorities in your state by calling them.

  6. I have been an employee of my company for 34 yrs. My position is being eliminated but I have been offered another position for less money. It is a much more physical job that I am not sure I can perform well. I am 75. If I try to fulfill the position and cannot do it, will I still be able to get benefits if I quit? They want me to try it for a couple of weeks to see if I am strong enough and if I can afford the cut in pay.

    1. Lynda,

      I suggest you call the Unemployment Office to find out about eligibility before making a decision on continuation.

      1. I recently lost my job..i was late for work and they took me off the schedule..never told me i was fired..didnt ask for uniforms back. Another cook was andd has been late for work and he didnt get taken off the schedule.can i still get unemployment?

        1. Kandie,

          Please note UI benefits are only offered to claimants who lose employment due to no fault of their own. You can call the Unemployment Office for clarification.

  7. Are there any training benefits or programs that will pay for an advanced degree, such as a PhD which is needed to become more employable?

    1. There are multiple training programs administered by the Labor Department in each state. For more info, please call visit the official website of the Unemployment Office.

  8. I’m about to exhaust my Unemployment benefits. I was laid off from my first job and
    found employment then I lost my job and became unemployed again. I applied for benefits and have have almost exhausted my benefits but have not found employment. Can I file for an extension?

    1. Deanna,

      The E.U.C(Emergency Unemployment Compensation) remains expired. There is no extension available. Please inquire further with the labor authorities in your state by calling them.

  9. After reading your article it’s still not clear to me about requirements surrounding moving to another state and completing/continuing to collect. I have 8 weeks eligibility left, I am moving from MA to FL. The end of your article says: “Since it’s all virtual (online), you may still consider the option of continuing your claims from the base state even if you move to a different one until completion. As a responsible claimant, it’s your duty to inform the base state about your movement to ensure there are no hassles in the near future.”

    So it sounds like even once I am in new state I am eligible to continue to collect from my base state. I can just continue to do my required weekly job search and reporting to and filing in my base state (I do it via phone call-in). No need to complicate things by doing some crazy state transfer of benefits. Benefits also done via direct bank deposit and no need to change anything. Do I even need to tell my base state I am now living in a new state? Why? Thank you.

    1. Paul,

      For the ease of understanding, each state has its specific rules and laws with regard to administering Unemployment Benefits. It might be an obligation for a claimant to inform about the movement. For clarification, please call the Unemployment Office and speak to a representative.

  10. I was recently fired from my work 25-June-2019/due to me not meeting their “standards/ expectations” i submitted my UE claim on 28-June and have not received any pay as of today, 19-July. The status is currently “adjudication in progress,” my question is, should i be worried this will be denied? I read the FAQ on the UE webpage and it said only a couple applications require the adjudication process. How long does this process usually take to get the final answer of whether I’m denied or approved? The website stated it susuallt takes ~25 days for the adjudication process, does this mean once that’s done then i still have to wait another 2-6 weeks for final processing after? THANK YOU SOO MUCH to whomever is able to provide me with some answers/ input.

    ** this is my first time ever being fired or having to file for unemployment so i really have nooooo idea what is standard or normal or whatever. I feel like an idiot with my simple questions but it would bring me so much relief having them answered, truly

    1. Talia,

      I can understand your reason for the anxiety. Adjudication is a fact-finding process where both the claimant and the employer will get an opportunity to present their case. During this process, make sure to produce supporting documents that amplify your stance. For all you know, the adjudication can be a lengthy process.

      Best Wishes!

  11. I was permanently severanced from my job due to a Co. Reorg & received my last severance pay last week. I called UE & was told that I should now do my application online since I will no longer be getting funds & still without a job & that this coming Sunday regardless of knowing if I will or will not get benefits yet that I should still file a weekly claim in case of UE back pay.
    So my question is, do I still have to report 4 jobs applied to within this week, even if I do not know if I will be approved/denied for benefits until possibly next week anyway?

    1. Lynda,

      You should continue to report the job applications as long as you’ve been asked to do so. There will be a “Waiting Period” and the first payment will take about 7-10 days after which they’ll flow much quicker. Please call the Claims Center for clarification.

  12. I tried to transfer from one state to another. When I left Montana I was told there would be no problem transferring. When I arrived in North Carolina I had trouble reaching the area manager by phone. When he finally called me back he said to meet him for lunch to discuss when and where I would be working. He did not show up for lunch. Then he never returned any of my calls. I went PA to visit a friend a few weeks later and tried there. I met with the hiring manager and was told there should not be a problem doing the transfer since I was still in the system. I called the store a few times and they said it was still pending. Then I was terminated without even a phone call. Am I eligible for unemployment and if so do I file in Montana or North Carolina. I still have a Montana drivers license but I am living in NC.

    1. Stacey,

      As long as you were unemployed involuntarily, you should be able to claim UI benefits. Please consider applying.

  13. I have worked for 32+ years and recently have become unable to work due to health reasons, so I have had to resign from my job. I have contacted SS and will be able to apply for disability but it will take awhile to process. Can I apply for unemployment benefits? I live in WV.

    1. Sandra,

      UI benefits are only extended to claimants who lose their employment due to involuntary reasons. Please reach out to the Unemployment Office for more.

  14. I had to quit my job at Walmart in Fairmont West Virginia and moved back to my home state ky, I’ve got a son with drug problems and 3 older sisters that are not doing so well in health cause of their age. I didn’t understand about the transfer part they had at Walmart that I could put a date when I could start back because of my car problems I thought when I left I had to go in like in s few days, I’ve applied here at Walmart in Winchester ky 40391 two times already plus dollar store, speedway, truck stop, bp, a few other places it’s been going on 7 months without a job I live with my son and its getting harder on him paying rent and utilities and food, not to mention our personal hygiene stuff I really need help I have no income coming in to help him and his wife out I get foodstamps and Medicaid I was praying I could qualify for unemployment PLEASE HELP!!!

    1. Vicky,

      I can understand your situation. Unfortunately, UI benefits are only extended to claimants who lose employment due to involuntary reasons. Please call the Unemployment Office for further clarification.

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