Unemployment Rate: What Goes Up Must Come Down
IBISWorld Research Shows Economic Recovery Despite High Jobless Claims
LOS ANGELES – (March 5, 2010) – Despite unemployment levels reaching heights unseen since the early 1980s, the economy is in a state of recovery, according to industry research firm IBISWorld. The company projects that unemployment levels have reached a peak and will remain around 10 percent throughout 2010 before falling to an average of 9.4 percent throughout 2011.
“Unemployment growth is a concern because consumer spending accounts for 70 percent of the economy,” said Toon van Beeck, senior analyst with IBISWorld. “The general consensus is that we’re still a long way from a sustained recovery, however, that’s not true. We are definitely in the midst of recovery.”
There have been seven recessions since the 1960s, with some being mild and others severe. In all cases, there is a clear uptrend, peak and downtrend in initial jobless claims and unemployment surrounding the recession. This downward trend in jobless claims typically begins before the recession is “officially” over, followed by some volatility.
“After a peak in jobless claims, we often see some kind of volatility and fluctuations as the chart heads downward,” explained van Beeck. “This is typical and has occurred in six of the seven recessions, including the current one.”
There are several reasons behind the most recent spike in jobless claims. January and February are low retail months and the drop off of Christmas hiring will affect employment figures. Additionally, this winter season has seen record-breaking storms, which has negatively impacted many people’s ability to work.
“The post-Christmas lull combined with poor weather conditions have really affected the current jobless claims,” said van Beeck. “However, this is only short term and the numbers will fall as the weather warms and we enter stronger retail and construction months.”
Towards the end of 2009, IBISWorld stated that the recession recovery will be U-shaped, rather than V-shaped. The U.S. economy is emerging from the deepest recession since the 1930s and this has bred uncertainty, which will increase overall volatility. Consequently, growth will return at a slow pace, but the economy is still in the midst of recovery.
About IBISWorld, Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every U.S. industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide
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