The U.S. unemployment rate jumped to 4.6 percent in November following the government shutdown as the unemployment level rose to 7.8 million, the highest since October and September 2021, respectively, the latest data from the Bureau of Labor Statistics (BLS) shows.
Which, again, is usually what happens after peak inflation — it reached 9.1 percent in June 2022 — and the economy is still reeling. The unemployment level is now up almost 2.1 million since January 2023, 1.3 million of which occurred before President Donald Trump was even sworn into office, a long-term trend dating back to the administration of former President Joe Biden.
The good news is that also usually means that inflation has more room to fall — consumer price growth tends to slow down through the entire rise in unemployment. The Federal Reserve is already projecting that inflation should continue slowing through 2026 in its latest economic projections from its December meeting.
The bad news is that households maxed out their credit — consumer credit growth peaked in April 2022 — and in every instance the end result of inflation of similar magnitudes in modern history was a recession.
The longest period for increasing unemployment in modern history was 39 months, from March 1989 to June 1992 when it rose 3.8 million to 10 million, and we’re at 34 months now. So, the other good news is we should almost be out of this stretch. Watch out: Sometimes joblessness can accelerate at the very end of such a cycle. But it should almost be over.
More good news in the long-run is that rising incomes and wages tend to offset high inflation. That’s true, but unless it happens rapidly, it will be of little comfort to impatient voters, particularly those independents not married to any particular party, but over time, the message can stick — when it’s true.
Right now, with the latest data from BLS, average weekly earnings have increased by 3.5 percent the past 12 months as of November, outpacing consumer prices’ last reading was in October at a 3 percent the past year, as they have been since June 2023, with fresh data coming out on Dec. 18. Stay tuned!
Politically, you’re generally better off if there is a recession to have it as early in the administration as possible. When the economy stinks, voters will let you know.
Congressional midterms are tough enough for the White House incumbent party in any environment either way — recessions don’t help but nothing usually does — losses there over the long term can usually be offset in subsequent presidential elections.
Whereas high inflation and/or recessions in presidential election years are majority killers. High inflation outpacing incomes made Gerald Ford, Jimmy Carter, George. H.W. Bush and Joe Biden all one-term presidents. The Great Depression coincided with Herbert Hoover’s defeat in 1932. And the Covid recession coincided with President Trump’s own 2020 defeat.
Other recessions coinciding with the White House incumbent party losing after two terms in office were recessions in 1960 and 2008, both defeating incumbent Republicans.
We’ve already had two consecutive one-term presidents in a row. Three one-term party administrations in a row would be the first since the 1800s, with the White House incumbent losing in 1844, 1848 and 1852, and then again in 1888, 1892 and 1896.
Unsurprisingly given those outcomes, the U.S. experienced three consecutive recessions in the 1840s: from 1839 to 1843, another in 1845 to 1846 and yet another in 1847 to 1848. And again in the late 1880s and early 1890s, there were four consecutive recessions: one in 1887 to 1888, another in 1890 to 1891, yet another in 1893 and one more in 1896.
Every election is always a referendum on the incumbents, and when you forget it, inflation, unemployment and recessions have a way of reminding you. Unsurprisingly, the economy, inflation and the cost of living continue to rank among the top issues for voters, and so the administration will assuredly continue to reassure American households that there is a steady hand at the wheel.
Unemployment is rising and has been for nearly three years, unsurprisingly, following very bad inflation. Inflation in turn has definitively slowed since its 2022 peak and should continue slowing through 2026, along with interest rates being eased, according to the latest Federal Reserve economic projections.
It’s probably worth noting that all of this would already be over with had the Federal Reserve simply started hiking interest rates in 2021 instead of 2022. By December 2021, inflation had already reached 7.1 percent and the Fed did nothing. Instead, Fed Chairman Jerome Powell waited to act following the Covid recession, left rates too low, for too long as the money supply exploded by more than $6 trillion during and after the pandemic and global production shut down.
And many of the most favorable provisions of the One Big Beautiful Bill Act will be going into effect in 2026, providing more relief into what could be a slowdown or recession — although the elusive “soft” landing remains also in the realm of possibility. It would be remarkable to come out of that inflation without a recession declared, but that’s the job of the National Bureau of Economic Research.
Regardless of what academics say, voters have a mind of their own and when they’re hurting, they’ll tell you. In the end, the longer the pain goes on, the more it lands on the incumbent party. Fortune is a fickle mistress, as the saying goes.
Robert Romano is the Executive Director of Americans for Limited Government Foundation.
