What Is the Current U.S. Unemployment Rate?

The unemployment rate was 3.9% in December 2021

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Unemployment is one of the most critical economic issues facing the country as it balances re-opening with safety more than a year into the pandemic.

The unemployment rate reached 14.8% in April 2020 after federal and local governments shut down the economy. This was the highest since the Great Depression.

December 2021's unemployment rate dropped slightly from November's, with a rate of 3.9% compared to 4.2%, but it was still higher than pre-pandemic levels: 3.5% in February 2020. The December unemployment rate was 0.3 percentage points lower than in November.

Notably, December 2021 marks the first time the unemployment rate has dropped below 4% since the beginning of the pandemic.

Employment conditions continue to improve, but 9% of adults said that their households didn't have enough to eat in the last seven days, according to data collected from Sept. 29 through Oct. 11, 2021.

The sectors with the biggest job gains included professional and business services, transportation and warehousing, construction, and manufacturing. Professional and technical services led the professional and business services sector with an increase of 10,120 jobs. Truck transportation led the transportation and warehousing sector with an increase of 1,523 jobs.

The Federal Reserve has estimated that the economy would hit a 3.8% unemployment rate in 2022, and 3.5% in 2023.

Overall, the number of unemployed is at 6.3 million. The number of unemployed is down, but the pandemic is still affecting the employment situation, as the unemployment rate is still higher than pre-pandemic levels.

The Unemployment Figures in Detail

The total number of unemployed is 6.3 million, down 483,000 from November. The number of long-term unemployed (those searching for jobs for 27 weeks or more) dropped to 2.19 million. A smaller number, 1.7 million, lost jobs within the last five weeks. This number declined from November's 1.9 million.

The real unemployment rate was 7.3% in December, 0.5 percentage points lower than in November. This alternate measure of unemployment, known as U-6, gives a broader definition of unemployment. It includes people who would like a job but haven't looked for one in the past month. It also includes those who are underemployed and marginally attached.

The real unemployment rate includes 463,000 discouraged workers, increasing from 451,000 in November and down from 657,000 back in Dec. 2020. Discouraged workers are people who have given up looking for work but would take a job if offered. They are not counted in the unemployment rate because they haven't looked for a job in the past four weeks.

The labor force participation rate in December was unchanged from November, remaining at 61.8%. The labor force doesn't include those who haven't looked for a job in the past month. Some would like a job, but others dropped out of the labor force for different reasons. They may have retired, gone back to school, or had a baby.

Difference Between the Unemployment and Jobs Reports

The unemployment rate and figures from the jobs report don't always tell the same story because they are taken from two different surveys.

The unemployment rate is taken from the household survey of individuals. It describes who is employed and who isn't based on their responses.

The number of jobs added is taken from the establishment report, more commonly called the nonfarm payroll report. This survey of businesses describes how many jobs were created or lost by industry.

The number of unemployed doesn't match the number of jobs lost because these reports are taken from completely different sources. Those discrepancies are expected, and the estimates are revised each month as more data comes in.

How to Use the Unemployment Rate

Keep in mind that the unemployment rate is a lagging indicator. It tells you what has already happened, since employers only lay off workers after business slows down.

The unemployment rate isn't lagging as much as usual because the pandemic is still creating sudden changes.

Companies resist hiring new workers when a recession is over until they can be sure that the economy will stay strong. The economy could improve for months, and the recession could be over before the unemployment rate drops. It's not suitable for predicting trends, but it's useful for confirming them.

Recent Unemployment History

You can check the unemployment rates since 1929 to put November's report into perspective,

Unemployment stayed above 14% for nine years between 1931 and 1940. The unemployment rate reached a record of 24.8% in 1933 after a few years of increasing. April 2020's unemployment rate skyrocketed to 14.7% in only one month.

Unemployment rose to 10.8% in November 1982, dropped to 3.8% in April 2000, then peaked at 10% in October 2009. These two recession-driven spikes resulted in elevated unemployment levels that lasted for years.

Key Takeaways

  • The unemployment rate was 3.9% in December 2021, which was 0.3 percentage points lower than in November.
  • This is higher than unemployment before the pandemic, which was around 3.5%.
  • Some of the biggest gains came in professional and business services, transportation and warehousing, construction, and manufacturing.