US Unemployment Rate (UNRATE)
Monthly US unemployment rate (UNRATE) from 2000 onwards. The second leg of the Fed's dual mandate (maximum employment alongside price stability) and the most important labour-market data release in financial markets. Includes the 14.7 percent April 2020 COVID spike (highest since the Great Depression), the 3.4 percent April 2023 multi-decade low, and the gradual 2024-2026 normalisation. AUD-trader framing on Fed reaction function and global recession risk.
Chart
Monthly US unemployment rate from BLS. Reference line marks the Fed's ~4 percent natural-rate estimate.
What is the unemployment rate?
The official US unemployment rate (U-3 in BLS terminology) is the percentage of the civilian labour force aged 16 and over that is unemployed but actively seeking work in the previous 4 weeks. The BLS conducts the Current Population Survey monthly across about 60,000 households to estimate it. The result is the headline rate published the first Friday of each month at 8:30 ET as part of the Employment Situation report (the 'jobs report').
UNRATE does not count people who have stopped looking for work (discouraged workers) or those who are working part-time but want full-time work (involuntary part-time). For broader measures, the BLS also publishes U-1 (long-term unemployed), U-4 (adds discouraged), U-5 (adds marginally attached), and U-6 (adds involuntary part-time, the broadest standard measure).
The Fed's dual mandate and unemployment
The Federal Reserve Act (1977 amendment) directs the Fed to pursue "maximum employment, stable prices, and moderate long-term interest rates." Maximum employment is operationalised as the unemployment rate consistent with stable inflation - the natural rate, currently estimated around 4 percent in the Fed's Summary of Economic Projections.
When unemployment is below the natural rate, the Fed faces wage-inflation pressure and tends toward tighter policy. When unemployment is rising and above the natural rate, the Fed has space to cut to support the labour market. The September 2024 first cut of the current cycle was justified largely on the unemployment side of the dual mandate: rising unemployment from 3.7 to 4.3 percent gave the Fed confidence to cut even before headline inflation reached the 2 percent target.
The Sahm Rule recession indicator
The Sahm Rule (Claudia Sahm, 2019) fires when the 3-month moving average of the US unemployment rate rises by 0.50 percentage points or more relative to the trailing 12-month minimum. Historically the rule has signalled every US recession start since 1970 without a single false positive.
The Sahm Rule triggered in July 2024 (3-month avg at 4.13 percent vs prior 12-month minimum of 3.6 percent). At time of writing in 2026, the US economy has not entered a NBER-dated recession, making this the first apparent false positive in the Sahm Rule's history. Sahm has commented that post-COVID labour-supply normalisation (immigration, returning workers) may be inflating the unemployment rate without the corresponding demand-side weakness that typically accompanies pre-recession unemployment rises.
Methodology
- Source. FRED series UNRATE (BLS Current Population Survey, monthly seasonally adjusted).
- Endpoint. Public fredgraph.csv.
- Recession shading. NBER-dated US recessions.
- Threshold. 4 percent reference line for Fed natural-rate estimate.
- Static-first. Snapshot preserved if FRED unreachable.
Related tools
- Fed Funds Rate - the policy response to unemployment.
- CPI Inflation - the other half of the Fed's dual mandate.
- 2Y/10Y Yield Curve - the bond-market recession signal alongside Sahm Rule.
- VIX - the risk-off-bid variable rising employment uncertainty drives.
Frequently asked questions
The unemployment rate (FRED UNRATE) is the percentage of the civilian labour force that is unemployed but actively seeking work. Published monthly by the Bureau of Labor Statistics in the Employment Situation report on the first Friday of each month at 8:30 ET. The BLS conducts the Current Population Survey (CPS) covering about 60,000 households to estimate the rate. UNRATE is the standard headline rate; the BLS also publishes U-1 through U-6 alternative measures covering broader definitions of labour-market slack.
Because it is one half of the Fed's dual mandate. The Federal Reserve Act directs the Fed to pursue 'maximum employment, stable prices, and moderate long-term interest rates.' When unemployment is rising, the Fed has space to cut rates even if inflation is above target. When unemployment is at historic lows (April 2023, 3.4 percent), the Fed has more confidence to keep rates elevated to fight inflation. The September 2024 first rate cut was justified partly by rising unemployment (3.7 to 4.3 percent over the year) rather than fully-tamed inflation.
Indirectly via Fed expectations and global growth. Rising US unemployment = Fed cuts coming = AUD/USD tailwind via USD-weakness channel. Rising US unemployment also signals weakening US consumer spending, which slows global growth, which weakens commodity demand, which is mixed for AUD (USD weakness helps; commodity weakness hurts). The net effect is usually mildly AUD/USD positive when unemployment rises modestly, and AUD/USD negative when unemployment spikes (risk-off dominates).
A real-time recession indicator developed by economist Claudia Sahm. It fires when the 3-month moving average of the unemployment rate rises by 0.5 percentage points or more relative to its 12-month low. Historically the Sahm Rule has signalled the start of every recession since 1970 with no false positives - until 2024, when it triggered in July 2024 but the US economy continued to grow through 2025-2026. Sahm herself has commented that the 2024 trigger may reflect post-COVID labour-supply normalisation rather than recession onset.
Economist estimates of the unemployment rate consistent with stable inflation in the medium term. The Fed's longer-run unemployment rate projection in the Summary of Economic Projections runs around 4.0 to 4.2 percent. When unemployment is below this level, wage pressures typically build; when above, inflation pressures typically ease. The 2022 unemployment rate at 3.5 percent during a 9 percent inflation print was widely cited as evidence the labour market was overheated relative to the natural rate.
FRED series UNRATE sources the Bureau of Labor Statistics monthly Employment Situation report (the 'jobs report'). The series begins January 1948. This chart starts from 2000 to focus on the modern Fed regime.
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