Journal Article
Reconciling Recent Strong Output Growth with Rising Unemployment
Abstract: Over the last three years, robust GDP growth alongside comparatively weak labor market data on jobs and unemployment has presented a puzzle to policymakers and analysts. This disconnect shows up as elevated labor productivity growth and an unemployment rate that has risen despite robust GDP growth, violating the usual inverse relationship known as Okun’s law. We show that these data may be less puzzling than they appear. Historical revision patterns provide no evidence that recent productivity gains will be revised away. And once we account for lagged effects, the comovements of recent GDP and unemployment rate data are consistent with historical patterns.
https://doi.org/10.26509/frbc-ec-202606
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Provider: Federal Reserve Bank of Cleveland
Part of Series: Economic Commentary
Publication Date: 2026-03-30
Volume: 2026
Issue: 06
Pages: 9