Briefing
Unemployment Changes as Recession Indicators
Hornstein, Andreas (2023-04)
After the rapid recovery from the COVID-induced 2020 recession, U.S. economic activity has slowed in 2022, but labor markets have remained strong, and the unemployment rate is at historically low levels. This Economic Brief reviews the evidence on changes in unemployment as a coincident indicator for the start of recessions. I find that changes in unemployment are good indicators of recessions, in particular when combined with lagged term spreads, which are good recession predictors at the one-year horizon but not reliable at short horizons.
Richmond Fed Economic Brief , Volume 23 , Issue 13