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Economic Viewpoint

Can the US Weather a Recession without a Spike in Unemployment?

September 20, 2022
Francis Généreux
Principal Economist

The job market always takes a hit when there’s an economic downturn. During the 1990–1991, 2001 and 2008–2009 recessions in the United States, the unemployment rate jumped 2.8%, 2.5% and 5.6% respectively. And that’s not counting the first two months of the pandemic in 2020, when the jobless rate shot up from 3.5% to 14.7%. Recession fears have been mounting in the United States. If the economy dips into recession, will unemployment spike from its current lows? Probably. But it’s also possible that the next economic contraction will be less painful for workers. Because of ongoing labour shortages, businesses may be more inclined to eliminate open positions and pull job postings than to let staff go. But it remains to be seen whether that will be enough to slow wage growth, which is helping to fuel soaring inflation and prompting the Federal Reserve to pursue restrictive monetary policy.