Blog

U.S. Unemployment Dips Below Peak of the Great Recession

In October of 1929, nervous investors began unloading
over-valued stocks and the stock market crashed. On
October 24 of that year, 12.9 million shares were traded.
That day became known as “Black Thursday.”


Five days later, on a day known in history as “Black
Tuesday,” another 16 million shares were traded. Shares
had become worthless and those who bought on margin were in ruins. This was the beginning of the Great Depression and it was the first domino to topple before a downturn in investing and spending caused
massive layoffs.

A more recent financial emergency emerged in 2007,
when the available credit in financial markets became
frozen and unavailable and banks could not make business loans. Banks were also forced to lend to riskier borrowers. Many people took on mortgages that they could not afford. The rate of foreclosures climbed for the next two years. Many referred to this period as the
Great Recession.

Gross domestic product (GDP) fell by 4.3 percent during
this period (2007-2009).

The one step that really helped wind down the recession
was the $700 billion bailout package, known as the
Troubled Asset Relief Program (TARP), put together by
president Bush’s Treasury Secretary Henry Paulson. The
government actually ended up making a profit on TARP.

Even two years after the recession ended, the
unemployment rate remained above nine percent. The unemployment rate went from five percent at the end of 2007, to nine and a half percent by June of 2009, and hit its peak of 10 percent by October of 2009.

Also, during this period, home values and the stock
market fell precipitously.

2020 Recession

Today, the U.S. has been stung by a global pandemic,
which has clobbered sectors of the market and
economy, left millions unemployed and changed
the social dynamics of day-to-day life.

The leisure and travel industry has been hardest
hit, with millions of layoffs and more to come in
the airline industry.

In August, the unemployment rate fell to 8.4 percent. The
number of unemployed people dropped by 2.8 million
to 13.6 million. Nonfarm payroll employment had rose by
1.4 million the same month. The unemployment rate as
recently as February 2020 was 3.9 percent. The impact of
the pandemic on U.S. employment cannot be overstated.

Coronavirus vaccines are in various phases of testing. Many come from large companies like Moderna,
AstraZeneca, Pfizer and Johnson and Johnson.

Johnson and Johnson’s entry into the vaccine race
is just going into phase 3 of clinical trials with 60,000
volunteers. The company is hoping to see results by
the end of the year or early next year.

A successful vaccine would enable the public to start
building immunity and returning to work. With some
restrictions being lifted in some states, the opportunity
for many Americans to return to work is slowly evolving.
Many moms are staying home to accommodate virtual
school and kids at home. This will continue to have an
effect on employment numbers leading up to the release
of a working vaccine.

For now, unemployment levels remain below the 2010
levels amid an ongoing crisis. Modern science, and its
ability to combat an infectious virus, is the key to bringing
unemployment numbers back to February levels and
stimulating the markets.