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
Unemployment reached an all-time high of 25% during the Great Depression. Interim Archive/Getty Images

The unemployment rate by year is the percent of unemployed in the labor force. It tracks the health of the country's economy. Unemployment rises during recessions and falls during prosperity. It also declined during the five U.S. wars, especially World War II. It rose again in the recessions that follow wars.

The highest rate of U.S. unemployment was 24.9 percent in 1933. That was during the Great Depression.

Unemployment was more than 14 percent from 1931 to 1940. Unemployment remained in the single digits until 1982 when it reached 10.8 percent. The annual unemployment rate reached 9.9 percent in 2009, during the Great Recession

The lowest unemployment rate was 1.2 percent in 1944. You may think that unemployment can't get too low, but it can. Even in a healthy economy, there should always be a natural rate of unemployment. That's because people move before they get a new job, they are getting retrained for a better job, or they have just started looking for work and are waiting until they find just the right job. Even when the unemployment rate is 4 percent, it's difficult for companies to expand because they have a hard time finding good workers.

Unemployment swings coincide with the business cycle. Slow growth causes high unemployment.. As gross domestic product declines, businesses lay off workers.

In return, jobless workers have less to spend.  Lower consumer spending reduces business revenue. That forces companies to cut more payroll to reduce their costs. This downward cycle is devastating.

Keep in mind that the unemployment rate is a lagging indicator. This means it continues to worsen even after economic growth improves.

Companies hesitant about hiring workers back until they are sure growth is on a stable upward trend. 

When the unemployment rate reaches 6 percent, the government steps in. The Federal Reserve uses expansionary monetary policy and lowers the federal funds rate. If unemployment continues, the Congress uses fiscal policy. It can directly create jobs for public works projects. It can also stimulate demand by providing extended unemployment benefits. Find out more about unemployment solutions.

The Bureau of Labor Statistics has measured unemployment since 1929. That's why the table below shows the unemployment rate for every year since the stock market crash of 1929. Comparing unemployment by year to fiscal and monetary policies provides a complete picture of what works and what doesn't. 

U.S. Unemployment Rate by Year Compared to GDP Growth, Inflation and Major Events

YearUnemployment Rate (December)GDP GrowthInflation (December Year-over-Year)What Happened
19293.2%NA0.6%Market crash
19308.7%-8.5%-6.4%Smoot-Hawley
193115.9%-6.4%-9.3%Dust Bowl
193223.6%-12.9%-10.3%Hoover's tax hikes
193324.9%-1.3%0.8%FDR's New Deal
193421.7%10.8%1.5%Depression eased thanks to New Deal.
193520.1%8.9%3.0%
193616.9%12.9%1.4%
193714.3%5.1%2.9%Spending cuts
193819.0%-3.3%-2.8%FLSA starts min wage
193917.2%8.0%0%Drought ended
194014.6%8.8%0.7%U.S. draft
19419.9%17.7%9.9%Pearl Harbor
19424.7%18.9%9.0%Defense tripled
19431.9%17.0%3.0%Germany surrendered
19441.2%8.0%2.3%Bretton Woods
19451.9%-1.0%2.2%War ends. Min wage $.40
19463.9%-11.6%18.1%Employment Act
19473.9%-1.1%8.8%Marshall Plan
19484%4.1%3.0%Truman reelected
19496.6%-0.5%-2.1%Fair Deal. NATO
19504.3%8.7%5.9%Korean War. Min wage $.75
19513.1%8.1%6.0%Expansion
19522.7%4.1%0.8%Expansion
19534.5%4.7%0.7%Korean War ended
19545%-0.6%-0.7%Dow returned to 1929 level
19554.2%7.1%0.4%Unemployment fell
19564.2%2.1%3.0%Min wage $1.00
19575.2%2.1%2.9%Recession
19586.2%-0.7%1.8%
19595.3%6.9%1.7%Expansion. 
19606.6%2.6%1.4%Recession. 
19616%2.6%0.7%JFK. Min wage $1.15
19625.5%6.1%1.3%Cuban Missile Crisis
19635.5%4.4%1.6%LBJ. Min wage $1.25
19645%5.8%1.0%Tax cut
19654%6.5%1.9%Vietnam War
19663.8%6.6%3.5%Expansion
19673.8%2.7%3.0%Min wage $1.40
19683.4%4.9%4.7%Min wage $1.60
19693.5%3.1%6.2%Nixon took office
19706.1%0.2%5.6%Recession
19716%3.3%3.3%Emergency Employment Act. Wage-price controls
19725.2%5.2%3.4%Stagflation
19734.9%5.6%8.7%CETA. Gold standard, Vietnam War ended
19747.2%-0.5%12.3%Watergate. Min wage $2.00
19758.2%-0.2%6.9%Recession ended.
19767.8%5.4%4.9%Expansion. 
19776.4%4.6%6.7%Carter took office.
19786%5.6%9.0%Fed raised rate to 20% to stop inflation
19796%3.2%13.3%
19807.2%-0.2%12.5%Recession
19818.5%2.6%8.9%Reagan tax cuts. Min wage $3.35
198210.8%-1.9%3.8%Job Act. Garn-St.Germain Act.
19838.3%4.6%3.8%Reagan increased military spending
19847.3%7.3%3.9%
19857%4.2%3.8%Expansion
19866.6%3.5%1.1%Tax cuts
19875.7%3.5%4.4%Black Monday
19885.3%4.2%4.4%Fed raised rate
19895.4%3.7%4.6%S&L Crisis
19906.3%1.9%6.1%Recession
19917.3%-0.1%3.1%Desert Storm. Min wage $4.25
19927.4%3.6%2.9%NAFTA drafted
19936.5%2.7%2.7%Balanced Budget Act
19945.5%4.0%2.7%School to Work Act 
19955.6%2.7%2.5%Expansion
19965.4%3.8%3.3%Welfare reform
19974.7%4.5%1.7%Min wage $5.85
19984.4%4.5%1.6%LTCM crisis
19994%4.7%2.7%Euro. Serbian airstrike
20003.9%4.1%3.4%NASDAQ hit record high.
20015.7%1.0%1.6%Bush tax cuts. 9/11 attacks
20026%1.8%2.4%War on Terror
20035.7%2.8%1.9%JGTRRA
20045.4%3.8%3.3%Expansion.
20054.9%3.3%3.4%Bankruptcy ActKatrina
20064.4%2.7%2.5%Expansion.
20075.0%1.8%4.1%EU became #1 economy. 
20087.3%-0.3%0.1%Min. wage = $6.55/ hour. Financial crisis
20099.9%-2.8%2.7%ARRA. Min wage $7.25. Jobless benefits extended
20109.3%2.5%1.5%Obama tax cuts. Iraq War ended
20118.5%1.6%3.0%26 months of job losses by July. Debt ceiling crisis. 
20127.9%2.2%1.7%QE10-year rate at 200-year lowFiscal cliff.
20136.7%1.7%1.5%Stocks up 30%. Long term=50% of unemployed. 
20145.6%2.6%0.8%Unemployment at 2007 levels.
2015 5.0%2.9%0.7%Natural rate
20164.7%1.5%2.1%Presidential race

 

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