At the onset of the COVID-19 pandemic, the United States saw a peak unemployment rate of about 15 percent in the two-month recession taking place between February and April of 2020 according to data by the U.S. Bureau of Labor Statistics (BLS). While this recession theoretically doesn't fall into the definition as "a significant decline in economic activity spread across the economy, lasting more than two quarters which is 6 months, normally visible in real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales" given by the National Bureau of Economic Research (NBER), it's still seen as one due to its immense impact on the domestic and global economies. As our chart based on data from the NBER and BLS shows, few recessions come close when looking at peak unemployment rates.
The closest candidates in this ranking are the recessions from 1981-1982, 2007-2009 and 1973-1975. All of these recessions are closely tied to global and domestic economic developments with wide-reaching consequences beyond unemployment rates. The recession from 1981-1982, for example, was caused in no small part by the Iranian Revolution in 1979, the following energy crisis and stricter monetary policies in the U.S. to combat inflation and prevent another stagflation. This portmanteau of stagnation and inflation was seen as purely theoretical by economists until the oil crisis and the stock market crash taking place between 1973 and 1975, which caused inflation and unemployment rates to soar at the same time.
The second-biggest crisis of the 21st century in terms of unemployment rate was tied to the collapse of the housing bubble caused by subprime mortgage rates. This, in turn, contributed to a global financial crisis and the default of financial institutions like the Lehman Brothers, which were bailed out by the United States government to the tune of $700 billion.
With the war between Russia and Ukraine unlikely to come to an end any time soon and inflation in the U.S. continuing to soar, analysts from Deutsche Bank are already forecasting a new recession, albeit with a lower impact on unemployment rates. According to the experts, this recession will hit in late 2023 and probably continue into 2024. Overall, this economic downturn is projected to be rather mild, with an expected unemployment rate of around five percent.
