Unemployment Rates:

This metric gauges the number of people actively seeking work as a percentage of the labour force.

A low unemployment rate usually signifies a healthy economy, as more people are gainfully employed, leading to higher consumer spending and investment.

Conversely, rising unemployment indicates economic distress, as businesses cut costs and consumers cut back on spending.

Unemployment levels typically goes down, slowly, for a long time, and then increases sharply, and then goes down slowly over time, and then leap up higher quickly. 

In a recession, unemployment rates typically skyrocket, affecting a wide range of sectors.

Those sharp upward spikes show lots of people losing their jobs. 

High unemployment rates can contribute to a self-perpetuating cycle of economic downturn, as less consumer spending leads to business closures and further job losses.

This cycle of slowy slowly declining followed by sharp upward spikes in people losing their jobs is often due to the human element of business, as people put off firing/ losing staff for as long as they can/ until it’s unavoidable.

It is vital to note that unemployment rates are often lagging indicators; they confirm that a recession has already begun rather than predict one.

Recession Signal: 

Nearly every time that unemployment rises by more than 0.5%, there is a recession and 100% of the time there is a recession unemployment jumps at least 2% off whatever it’s most recent low was. 

This matters because unemployment is the recession. We are nations of consumers, and we need money to consume things and if we don’t have jobs we don’t have money and we can’t consume.. and the system breaks.

Track this yourself

You can find Unemployment levels on TradingView: https://www.tradingview.com/chart/v7ZG3yMA/?symbol=ECONOMICS%3AUSBP

To make this easy, install US recessions indicator. The current low is at 3.41%, so draw a horizontal line at 3.91% (to represent a change of 0.5%, and therefore an indicator of a recession) and another one at 5.4%, to show 2% off the low, and confirmation that we are in a recession.