Unemployment & recessions in the US

The current American slowdown or recession threatens to raise the unemployment rate, as it always does. In New york some analysts are estimating that the financial industry may lay off as many as 20,000 workers including investment bankers, traders and office employees. The knock on effects of this on the New York economy will be very significant.
If we add to this situation the drop off in housing activity and the weakened state of US manufacturing which may be reviving somewhat due to the drop in the value of the US dollar we can see the widespread impact of the slowdown/recession.
One way of guaging the likely impact upon employment of the growth slowdown is to consult the history of past recessions. The data is easily obtainable.

For example, since 1870 there have been over 29 recessions in the US, including the grand daddy of them all the great depression of the early 1930s. In all of them unemployment rose by at least 2 % points. In many of them unemployment rose by at least 3 percentage points. In the great depression of 1929-1933, unemployment rose by an astonishing 17.5 percentage points.(See the data at NBER and also in Robert Barro's   macro text.)The average downturn or economic contraction since 1945 has lasted 10 months. The great depression lasted 43 months.

But unemployment always lags the start of a recession and usually stays elevated longer than the period of the contraction. Prior to 1945 contractions lasted much longer . In the the first part of the twentieth century according to NBER data they lasted an average of 16 months. In the nineteenth century they were much longer.

From 1854 to 1919 there were 16 contractions with an average duration of 22 months. 1919 to 1945 6 contractions   averaging 18 months.

So unless the US is undergoing another great depression , quite unlikely but not completely impossible, we should expect the unemployment rate to rise from its current level of 4.8 % to somewhere close to 7.8 % over the coming months.

Remember that it is the nature of economic   and other reality for there to be a degree of unknowable uncertainty about outcomes that even probability cannot adequately resolve.Therefore we cannot rule out completely highly unlikely events at any time although they remain unlikely.

The stimulus package now in place and the substantial injections of liquidity from the Federal Reserve should help dampen down the rise in unemployment somewhat. The months ahead will tell us how deep and long lasting the slowdown/recession will in fact be.