As the following chart from Bill Hester at the Hussman Funds shows, the rise in unemployment is tracking the trajectory of prior recessions. The blue line on the chart shows the average unemployment rate in recent US recessions, with the vertical black line showing the start of the recession. (Hester assumes ours began in January). The brown line is the current cycle.
It bears noting that Bill published this chart in August and that we have already exceeded the unemployment rate expected for Q2 next year. It’s also worth asking whether this recession is really shaping up to be an “average” recession–or whether, as seems far more likely, it will end up being a doozy.
If this recession is average, unemployment should peak around 7%. And if it’s a doozy? Let’s just hope it doesn’t end up looking anything like the 1930s…
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