Unemployment Rate by Year Since 1929 Compared to Inflation and GDP

U.S. Unemployment Rate History

apples being sold to unemployed people during the Great Depression
••• Interim Archive / Getty Images

The unemployment rate is the percentage of unemployed workers in the labor force. It's a key indicator of the health of the country's economy. Unemployment typically rises during recessions and falls during prosperity. It also has declined during five U.S. wars, especially World War II. It rose again in the recessions that followed the wars.

A Key Economic Indicator

The highest rate of U.S. unemployment was 24.9% in 1933, during the Great Depression.

Unemployment was more than 14% from 1931 to 1940. Unemployment remained in the single digits until 1982 when it reached 10.8%. The annual unemployment rate reached 9.9% in 2009, during the Great Recession.

The lowest unemployment rate was 1.2% in 1944. It may seem counterintuitive to think unemployment can't get too low, but it can. Even in a healthy economy, there always should be a natural rate of unemployment. People move before they get a new job or are getting retrained for a better job. Others have just started looking for work and are waiting until they find just the right job. Even when the unemployment rate is 4%, it's difficult for companies to expand because they have a hard time finding good workers.

Unemployment swings coincide with the business cycle. Slow growth causes high unemployment. As gross domestic product declines, businesses lay off workers. In return, jobless workers have less to spend.

 Lower consumer spending reduces business revenue. That forces companies to cut more payroll to reduce their costs. This downward cycle can be devastating.

Keep in mind that the unemployment rate is a lagging indicator. This means it continues to worsen even after economic growth improves. Companies remain hesitant to hire back workers until they are sure growth is on a stable upward trend.

When the unemployment rate reaches 6% the government steps in. The Federal Reserve uses expansionary monetary policy and lowers the federal funds rate. If unemployment continues, ​Congress uses fiscal policy. It can directly create jobs for public works projects. It also can stimulate demand by providing extended unemployment benefits.

U.S. Unemployment Rates Year by Year

The ​U.S. Bureau of Labor Statistics has measured unemployment since the stock market crash of 1929, and the following table shows how it has changed year by year along with other factors:

YearUnemployment Rate (December)GDP GrowthInflation (Dec. Year over Year)What Happened
19293.2%NA0.6%Market crash
193115.9%-6.4%-9.3%Dust Bowl
193223.6%-12.9%-10.3%Hoover's tax hikes
193324.9%-1.2%0.8%FDR's New Deal
193421.7%10.8%1.5%Depression eased thanks to New Deal.
193714.3%5.1%2.9%Spending cuts
193819.0%-3.3%-2.8%FLSA starts min wage
193917.2%8.0%0%Drought ended
194014.6%8.8%0.7%U.S. draft
19419.9%17.7%9.9%Pearl Harbor
19424.7%18.9%9.0%Defense tripled
19431.9%17.0%3.0%Germany surrendered at Stalingrad
19441.2%8.0%2.3%Bretton Woods
19451.9%-1.0%2.2%War ends. Min wage $.40
19463.9%-11.6%18.1%Employment Act
19473.6%-1.1%8.8%Marshall Plan negotiated.
19484.0%4.1%3.0%Truman reelected
19496.6%-0.6%-2.1%Fair Deal. NATO
19504.3%8.7%5.9%Korean War. Min wage $.75
19534.5%4.7%0.7%Korean War ended
19545.0%-0.6%-0.7%Dow returned to 1929 level
19554.2%7.1%0.4%Unemployment fell
19564.2%2.1%3.0%Min wage $1.00
19616.0%2.6%0.7%JFK. Min wage $1.15
19625.5%6.1%1.3%Cuban Missile Crisis
19635.5%4.4%1.6%LBJ. Min wage $1.25
19645.0%5.8%1.0%Tax cut
19654.0%6.5%1.9%US enters Vietnam War
19673.8%2.7%3.0%Min wage $1.40
19683.4%4.9%4.7%Min wage $1.60
19693.5%3.1%6.2%Nixon took office
19716.0%3.3%3.3%Emergency Employment Act. Wage-price controls
19725.2%5.3%3.4%Ongoing Stagflation. Watergate break-in.
19734.9%5.6%8.7%CETA. Gold standard, Vietnam War ended
19747.2%-0.5%12.3%Nixon resigns. Min wage $2.00
19758.2%-0.2%6.9%Recession ended.
19776.4%4.6%6.7%Carter took office.
19786.0%5.5%9.0%Fed raised rate to 20% to stop inflation
19818.5%2.5%8.9%Reagan tax cuts. Min wage $3.35
198210.8%-1.8%3.8%Job Training Partnership Act. Garn-St.Germain Act.
19838.3%4.6%3.8%Reagan increased military spending
19866.6%3.5%1.1%Tax cuts
19875.7%3.5%4.4%Black Monday
19885.3%4.2%4.4%Fed raised rate
19895.4%3.7%4.6%Reforms made to address S&L Crisis
19917.3%-0.1%3.1%Desert Storm. Min wage $4.25
19927.4%3.5%2.9%NAFTA drafted
19936.5%2.8%2.7%Omnibus Budget Reconciliation Act
19945.5%4.0%2.7%School to Work Act 
19965.4%3.8%3.3%Welfare reform
19974.7%4.4%1.7%Min wage $5.85
19984.4%4.5%1.6%LTCM crisis
19994.0%4.8%2.7%Euro. Serbian airstrike
20003.9%4.1%3.4%NASDAQ hit record high.
20015.7%1.0%1.6%Bush tax cuts. 9/11 attacks
20026.0%1.7%2.4%War on Terror
20054.9%3.5%3.4%Bankruptcy Abuse Prevention ActKatrina
20075.0%1.9%4.1%EU became #1 economy. 
20087.3%-0.1%0.1%Min. wage = $6.55/ hour. Financial crisis
20099.9%-2.5%2.7%ARRA. Min wage $7.25. Jobless benefits extended
20109.3%2.6%1.5%Obama tax cuts
20118.5%1.6%3.0%26 months of job losses by July. Debt ceiling crisis. Iraq War ended.
20127.9%2.2%1.7%QE10-year rate at 200-year lowFiscal cliff.
20136.7%1.8%1.5%Stocks up 30%. Long term=50% of unemployed. 
20145.6%2.5%0.8%Unemployment at 2007 levels.
2015 5.0%2.9%0.7%Natural rate
20164.7%1.6%2.1%Presidential race
20174.1%2.4%2.1%Dollar weakened
20183.9%2.9%1.9%Trump tax cuts.

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