US Employment Rate: 1948 – Present

The unemployment rate was released by the Bureau of Labor Statistics in January 1948 at 3.4% and ranged between 1948 to 1965 between 2.5% lows to highs at 7.5%, a 5 point range. Highs at 7.5 were anomalies as 39 months of 200 saw the unemployment rate above 6%. The period from 1965 – present day not only saw a doubling of the range to 10 points but 7.5 highs were broken in the 1970’s to reach 9.0%. On a Trimmed mean basis, the actual 67 year range is 6.13. The 67 year mid point from 10.8 highs to 2.5 lows is located at 6.65, the 50 year at 6.95 and 30 year at 6.8.

The current 5.1 unemployment rate held through September and October Non Farm payroll releases. The number above to beat is the 1 and 2 year averages located at 5.45 and 5.96. The supports below are found at 4.83 and 4.80. Above 5.9 then next comes 6.0, 6.1 and the various degrees of 6.0’s. Of the 12 outlined averages dated to 67 years, the vast majority are found from 6.0 to the misplaced 5 year average at 7.3.

What drives the unemployment rate is the 1, 2, 3 and 5 year averages. All are not only oversold and experience more oversold on rate drops but targets factor to a higher rate. Short term targets begin at 5.0, 5.24, 5.37, 5.58 and 6.09. Longer term averages are middle range and reveal the unemployment rate heads lower over time. Any rises in the unemployment rate represents an oversold correction in a far larger downtrend. Consider exactly 5 years ago, the unemployment rate was 9.4 and embarked on a steady downtrend to current 5.1%. The last time 5.1 was seen was 91 months ago or 7.58 years.

The unemployment rate and associated averages are slow movers yet it trends. When 6.1 broke 14 months ago, the unemployment rate saw 13 months of 5.0 drifts to 5.1, 9 months of 6.0’s and 10 months of 7.0’s. Typically throughout its 67 year history, the unemployment rate will hold for example in the 6.0’s for 1 -2 years then break to either 7.0’s or 5.0’d and hold for the next 1- 2 years. What is expected in the unemployment rate is slow movements and slow deviations in the 5.0’s.

Brian Twomey, Inside the Currency Market,