While unemployment rates have dropped from the high of 14.7% in April 2020, the U.S. currently sits at an unemployment rate of 3.5%. The combination of inflation and the potential threat of a recession could push the unemployment rate higher.
In Texas, 587,211 people remain unemployed in February 2023. This is a 2.16% change in unemployment from March 2023, the second-worst change in the U.S.
In order to take stock of how unemployment rates are changing throughout the U.S., WalletHub compared the 50 states and the District of Columbia with data obtained from the U.S. Bureau of Labor Statistics and the U.S. Department of Labor.
The data shows that Texas is suffering. In March 2023, Texas remained at a 4.0% unemployment rate, higher than the national average and the 12th highest unemployment rate in the nation.
Patrick Button, Associate Professor of Economics at Tulane University said, "labor markets have slow trends that take a few years to resolve unless there is some major event." While mild improvements can be predicted for 2023, "the economy is hard to predict, and since much of the situation we are currently in was due to mostly unforeseen events (COVID-19, the war in Ukraine, etc.), what will happen largely comes down to if any other big events happen or not."
The Federal Reserve attempting a "soft landing" of lowering inflation down to 2% without causing a recession could actually be enough of a disruption to precipitate a recession warns Tyler Schippeer, Associate Professor at the Department of Economics for the University of St. Thomas.
"There are risks though that the Fed will overshoot and tighten credit markets too much. I am also worried about other potential shocks stemming from dysfunction in Washington. Will the debt ceiling be increased? Will there be government shutdowns or draconian cuts to fiscal spending?" Shippeer questioned. "With the Fed performing a highwire act, those types of disruptions could be enough to precipitate a recession."
The question now is whether the government will be able to provide a "soft landing," and leave the labor markets relatively unaffected, or will the nation fall on a "hard landing," which could send the U.S. and other countries into recession and create an uptick in unemployment.
In the opinion of Miren Ivankovic, Adjunct Professor of Economics at Clemson University, "It seems that in the US, inflation is fairly "stubborn," and Federal Reserve will have to continue with a federal funds rate hike, which will affect firms' investments, production and sales, thus, one can expect a labor contraction."
