US Unemployment Rate (UNRATE)
Monthly US unemployment rate (UNRATE) from January 1948 to the latest jobs report (4.2 percent for September 2026). 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 April 2020 COVID spike to 14.8 percent (the highest in the series), the April 2023 low of 3.4 percent (the lowest since May 1969), and what has followed. AUD-trader framing on the Fed reaction function and global recession risk.
Chart
Monthly US unemployment rate from BLS, January 1948 onwards. Reference line marks the Fed's ~4 percent natural-rate estimate. Recessions shaded from 2001.
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 that easing cycle was justified largely on the unemployment side of the dual mandate: unemployment rising from 3.7 to 4.2 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 0.50 percentage points or more above its lowest level over the previous 12 months. Historically the rule has signalled every US recession start since 1970 without a single false positive.
The Sahm Rule triggered in July 2024. On current revised data the 3-month average reached 4.07 percent that month, 0.50 points above the lowest 3-month average of the prior 12 months (3.57 percent), and the gap widened to 0.57 points in August. As of September 2026 no NBER-dated recession has followed, 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 from 2001 onwards (2001, 2007-09, 2020). Earlier recessions are not shaded.
- Threshold. 4 percent reference line for Fed natural-rate estimate.
- Refresh cadence. An automated cloud refresh pulls the series from FRED twice a day (07:30 and 13:30 Sydney time) and the site rebuilds when the data changes. If FRED is unreachable, the last good data is kept.
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 (from 3.7 percent in January 2024 to 4.2 percent by July and August on current data) 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: it triggered in July 2024, but no NBER-dated recession had followed as of September 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. Unemployment of 3.6 percent in June 2022, the month CPI inflation peaked near 9 percent, 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 and the chart shows the full history. An automated refresh pulls it from FRED twice a day (07:30 and 13:30 Sydney time) and the site rebuilds when the data changes; if FRED is unreachable, the last good data is kept.
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