What happens to unemployment rates after a recession?
Written by Patty Silverstein, chief economist for the Metro Denver EDC, this section identifies major issues affecting the economy and answers frequently asked questions. Economists are predicting increasing unemployment and a rising unemployment rate into 2010 despite forecasting the recession to end sometime in the last half of 2009. Is this a paradox? Intuitively, it seems that if an economy is expanding then businesses will be hiring and the rate of unemployment should drop. However, looking back on the recession ending in 2001, it took 19 months for the national unemployment rate to peak and then decrease after the expansion started. Many sources project that the trend for the current recession will be no different with unemployment rates peaking after the trough of the business cycle. For instance, Chairman of the Federal Reserve Board of Governors Ben S. Bernanke, in a recent testimony to the House Budget Committee, projected that the recession would end by the end of this year.
