The national unemployment rate was at or below 5% from May 1997 to October 2001. At some points during that period, the rate dropped below 4%. Another run of 5% or lower stretched from June 2005 to February 2008. Shortly after and into the depths of the recession, in October 2009, the rate rose to 10%. It has not recovered to half of that level since.
Congressional Budget Office forecasts show that it does not expect the jobless rate to drop below 5% through 2017. Its projected annual average for the same measure between 2018 and 2024 is 5.5%. So, it can be argued that 5% or lower unemployment is no longer the benchmark of a healthy economy, at least in the United States.
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The causes for ongoing high unemployment fall into several categories. Among them are age, education and location. People with less than high school diplomas, ages 25 or older, had a jobless rate of 8.4% in September. The rate for people ages 20 to 24, even those with higher educational attainment, was 11.4% for the same month. In a number of cities, the jobless rate remains higher than 8%. There are no major trends to show that the fortunes of these groups will improve much. It may be that these pockets by themselves are part of the national push of the U.S. jobless rate to around 6%.
Enough people among the American population have become marginalized in terms of their ability to find jobs that 6% is a better measure of a complete recovery, what has been unfortunately called the “new normal.” However, one challenge to that theory is that the U.S. economy has not recovered entirely from the Great Recession at all. Major markers like gross domestic product and retail sales remain in flux. The Federal Reserve is worried enough that it has kept interest rates near historical lows.
In other words, based on a number of markers, the U.S. economy is years away from many traditional measures of a complete recovery, and the 5% unemployment rule still makes sense.
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