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News > Economy
Joblessness as litmus test
September 6, 2001: 3:07 p.m. ET

Historical comparison of data shows U.S. probably not in recession -- yet
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NEW YORK (CNNfn) - Friday's report on U.S. unemployment will be interesting enough on its own, but a recent study suggests it could also be an indicator of the likelihood of a recession in the U.S. economy.

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Banc One Investment Advisors compared historical unemployment data with the dates of the onset of recessions and found that, in the past 30 years, the average unemployment rate at the beginning of a recession was 6.1 percent. In the past 50 years, unemployment averaged 5.1 percent at the beginning of a recession.

The U.S. Labor Department is expected to report on the August unemployment rate Friday morning. Analysts surveyed by Briefing.com expect the rate to rise to 4.6 percent from July's reading of 4.5 percent.

Since unemployment has held well below the 5.1-percent threshold, the Banc One researchers said, the economy was not in a recession – at least, not yet.

"Our continued forecast of no recession is not entirely without risk," the report said, "since we believe that the unemployment rate may eventually reach a peak rate of 5.2 percent before the end of 2001."

The report estimated the possibility of a recession – commonly defined as two consecutive quarters of shrinking gross domestic product – at between 15 percent and 20 percent.

Click here for CNNfn.com's economic calendar

Though GDP hasn't fallen into negative territory yet, the U.S. economy has been in a prolonged slowdown that has resulted in companies reducing production and cutting hundreds of thousands of jobs.

In an effort to keep consumers spending and keep money flowing through the economy, the Federal Reserve has cut its target for short-term interest rates seven times this year. graphic

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.