Unemployment Rate by Year Since 1929 Compared to Inflation and GDP

U.S. Unemployment Rate History

apples being sold to unemployed people during the Great Depression
••• Interim Archive / Getty Images

The unemployment rate is the percentage of unemployed workers in the labor force. It's a key indicator of the health of the country's economy. Unemployment typically rises during recessions and falls during periods of economic prosperity. It also declined during five U.S. wars, especially World War II. The unemployment rate rose in the recessions that followed those wars.

How Unemployment Tracks Recessions

Unemployment tracks the business cycle. Recessions cause high unemployment. Businesses lay off workers and jobless workers have less to spend as a result. Lower consumer spending reduces business revenue, which forces companies to cut more payroll. This downward cycle is devastating.

The highest rate of U.S. unemployment was 24.9% in 1933, during the Great Depression. Unemployment remained above 14% from 1931 to 1940. It remained in the single digits until September 1982 when it reached 10.1%. During the Great Recession, unemployment reached 10% in October 2009.

The government steps in when unemployment exceeds 6%. The Federal Reserve uses expansionary monetary policy to lower interest rates. ​Congress uses fiscal policy to create jobs and provide extended unemployment benefits.

The unemployment rate falls during the expansion phase of the business cycle. The lowest unemployment rate was 1.2% in 1944.

It may seem counterintuitive to think unemployment can get too low, but it can.

The Federal Reserve believes that a so-called natural rate of unemployment falls between 3.5% and 4.5%—even in a healthy economy. If the rate falls any lower than that, the economy could experience too much inflation, and companies could struggle to find good workers that allow them to expand operations.

Even though the unemployment rate is tied to recessions, it is a lagging indicator. When an economy begins to improve after a recession, for example, the unemployment rate may continue to worsen for some time. Many companies hesitate to hire workers until they regain confidence in the recovery, and it may take several quarters of economic improvement before they feel confident that the recovery is real.

If you’re looking for work after a recession, you’ll find the going is still tough. It might take several months before the unemployment rate falls.

U.S. Unemployment Rates by Year

The ​U.S. Bureau of Labor Statistics has measured unemployment since the stock market crash of 1929. The following table shows how it has changed by year and why:  

Year Unemployment Rate (as of Dec.) GDP Growth Inflation (Dec. YOY) What happened
1929

3.2%

NA 0.6% Market crash
1930 8.7% -8.5% -6.4% Smoot-Hawley
1931

15.9%

-6.4% -9.3% Dust Bowl

1932

23.6% -12.9% -10.3% Hoover's tax hikes

1933

24.9% -1.2% 0.8% FDR's New Deal

1934

21.7% 10.8% 1.5% Depression eased thanks to New Deal

1935

20.1% 8.9% 3.0%  

1936

16.9% 12.9% 1.4%  

1937

14.3% 5.1% 2.9% Spending cuts

1938

19.0% -3.3% -2.8% FLSA starts min wage

1939

17.2% 8.0% 0% Drought ended

1940

14.6% 8.8% 0.7% U.S. draft

1941

9.9% 17.7% 9.9% Pearl Harbor

1942

4.7% 18.9% 9.0% Defense tripled

1943

1.9% 17.0% 3.0% Germany surrendered at Stalingrad

1944

1.2% 8.0% 2.3% Bretton Woods

1945

1.9% -1.0% 2.2% War ends. Min wage $0.40

1946

3.9% -11.6% 18.1% Employment Act

1947

3.6% -1.1% 8.8% Marshall Plan negotiated

1948

4.0% 4.1% 3.0% Truman reelected

1949

6.6% -0.6% -2.1% Fair Deal; NATO

1950

4.3% 8.7% 5.9% Korean War; Min wage $0.75

1951

3.1% 8.0% 6.0% Expansion

1952

2.7% 4.1% 0.8% Expansion

1953

4.5% 4.7% 0.7% Korean War ended

1954

5.0% -0.6% -0.7% Dow returned to 1929 level

1955

4.2% 7.1% 0.4% Unemployment fell
1956 4.2% 2.1% 3.0% Min wage $1.00
1957 5.2% 2.1% 2.9% Recession
1958 6.2% -0.7% 1.8%  
1959 5.3% 6.9% 1.7% Expansion
1960 6.6% 2.6% 1.4% Recession

1961

6.0% 2.3% 0.7% JFK; Min wage $1.15
1962 5.5% 6.1% 1.3% Cuban Missile Crisis
1963 5.5% 4.4% 1.6% LBJ; Min wage $1.25
1964 5.0% 5.8% 1.0% Tax cut
1965 4.0% 6.5% 1.9% US enters Vietnam War
1966 3.8% 6.6% 3.5% Expansion
1967 3.8% 2.7% 3.0% Min wage $1.40
1968 3.4% 4.9% 4.7% Min wage $1.60

1969

3.5% 3.1% 6.2% Nixon took office
1970 6.1% 0.2% 5.6% Recession
1971 6.0% 3.3% 3.3% Emergency Employment Act; Wage-price controls

1972

5.2% 5.3% 3.4% Ongoing StagflationWatergate break-in
1973 4.9% 5.6% 8.7% CETA; Gold standard; Vietnam War ended
1974 7.2% -0.5% 12.3% Nixon resigns; Min. wage $2.00
1975 8.2% -0.2% 6.9% Recession ended
1976 7.8% 5.4% 4.9% Expansion
1977 6.4% 4.6% 6.7% Carter took office
1978 6.0% 5.5% 9.0% Fed raised rate to 20% to stop inflation

1979

6.0% 3.2% 13.3%  

1980

7.2%

-0.3%

12.5%

Recession

1981

8.5%

2.5%

8.9%

Reagan tax cuts; Min. wage $3.35

1982

10.8% -1.8% 3.8% Job Training Partnership Act; Garn-St.Germain Act
1983 8.3% 4.6% 3.8% Reagan increased military spending
1984 7.3% 7.2% 3.9%  
1985 7.0% 4.2% 3.8% Expansion
1986 6.6% 3.5% 1.1% Tax cuts
1987 5.7% 3.5% 4.4% Black Monday
1988 5.3% 4.2% 4.4% Fed raised rate
1989 5.4% 3.7% 4.6% Reforms made to address S&L Crisis
1990 6.3% 1.9% 6.1% Recession
1991 7.3% -0.1% 3.1% Desert Storm; Min. wage $4.25
1992 7.4% 3.5% 2.9% NAFTA drafted
1993 6.5% 2.8% 2.7% Omnibus Budget Reconciliation Act
1994 5.5% 4.0% 2.7% School to Work Act 
1995 5.6% 2.7% 2.5% Expansion
1996 5.4% 3.8% 3.3% Welfare reform
1997 4.7% 4.4% 1.7% Min. wage $5.85
1998 4.4% 4.5% 1.6% LTCM crisis
1999 4.0% 4.8% 2.7% Euro; Serbian airstrike
2000 3.9% 4.1% 3.4% NASDAQ hit record high

2001

5.7% 1.0% 1.6% Bush tax cuts; 9/11 attacks
2002 6.0% 1.7% 2.4% War on Terror
2003 5.7% 2.9% 1.9% JGTRRA
2004 5.4% 3.8% 3.3% Expansion
2005 4.9% 3.5% 3.4% Bankruptcy Abuse Prevention Act; Katrina
2006 4.4% 2.9% 2.5% Expansion
2007 5.0% 1.9% 4.1%  
2008 7.3% -0.1% 0.1% Min. wage $6.55; Financial crisis
2009 9.9% -2.5% 2.7% ARRA; Min. wage $7.25; Jobless benefits extended
2010 9.3% 2.6% 1.5% Obama tax cuts
2011 8.5% 1.6% 3.0% 26 months of job losses by July; Debt ceiling crisis; Iraq War ended
2012 7.9% 2.2% 1.7% QE; 10-year rate at 200-year low; Fiscal cliff
2013 6.7% 1.8% 1.5% Stocks up 30%; Long term = 50%  unemployed
2014 5.6% 2.5% 0.8% Unemployment at 2007 levels
2015 5.0% 2.9% 0.7% Natural rate
2016 4.7% 1.6% 2.1% Presidential race
2017 4.1% 2.4% 2.1% Dollar weakened
2018 3.9% 2.9% 1.9% Trump tax cuts
2019 3.5% 2.3% 2.3% Goldilocks economy

Article Sources

  1. Bureau of Labor Statistics. "Labor Force, Employment, and Unemployment, 1929-39: Estimating Methods." Page 2, Table 1. Accessed Jan. 11, 2020.

  2. Bureau of Labor Statistics. "Unemployment Rate." Select "Unemployment rate." Accessed Jan. 11, 2020.

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  4. Board of Governors of the Federal Reserve System. "What Is the Lowest Level of Unemployment That the U.S. Economy Can Sustain?" Accessed Jan. 11, 2020.

  5. Federal Reserve Bank of San Francisco. "Gauging the Momentum of the Labor Recovery." Accessed Jan. 11, 2020.

  6. Bureau of Labor Statistics. “Consumer Price Index Database, All Urban Consumers.” Select “U.S. City Average, All items,” Retrieve Data, Select “More Formatting Options,” Select “12-Month Percent Change." Accessed Jan. 11, 2020.

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  8. Bureau of Labor Statistics. "Labor Force Statistics from the Current Population Survey." Accessed Jan. 11, 2020.