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It's not that employment itself leads to a recession, but that low unemployment has been a 100% accurate lagging indicator for recessions.
by enraged_camel 3y ago
It's not that employment itself leads to a recession, but that low unemployment has been a 100% accurate lagging indicator for recessions.
- jacobolus 3y agoThere's no limit to how long we can have low unemployment, and no rule that recessions have any particular temporal spacing or severity. All we can see from your chart is that occasionally there is a recession, that these are spaced unpredictably in time but usually no longer than 2 decades apart (but sometimes only a few years apart, and plausibly it could be longer), and then unemployment rises from wherever it happens to be. But that doesn't mean the recession is caused by either low unemployment directly or by the causes of low unemployment, or that the recession is at all predictable from unemployment data.
- enraged_camel 3y agoI mean yes, it’s not a causation. But it’s pretty difficult to argue that an extremely strong correlation doesn’t exist.
- deleted 3y ago[deleted]