Chart of the Week: Unemployment by Duration

Source: Bureau of Labor Statistics

Based on the November 2024 jobs report, the unemployment rate is above 4.2%, the household survey again showed a large drop in employment, and more households reported spells of long-term unemployment, which is typically defined as being unemployed for 27 weeks or more. While we are not seeing a pickup in layoffs, new entrants and individuals who lose jobs are having difficulty regaining employment.

Taking a closer look, among unemployed workers, 23.2% were unemployed for 27 weeks or more, compared to a share of 19.4% a year ago. The number of long-term unemployed was 1.66 million, up 36% from 1.22 million a year ago. Additionally, workers unemployed for 15-26 weeks saw an increase in share from 14.8% to 17.2%, and a 32% increase in headcount from 931,000 in November 2023 to 1.23 million in November 2024. Across all unemployed workers, the average duration of unemployment in November was 23.7 weeks, this duration being the longest seen since April 2022.

While unemployment is still relatively low from a historical perspective, we are paying attention to this trend, as mortgage performance is closely tied to the health of the labor market. Combined with debt levels for credit cards and auto loans that continue to increase, higher consumer credit delinquencies, and the resumption of student loan repayments, more households are under greater financial stress. The overall mortgage delinquency rate remains low, but 90+ day delinquency rates for FHA and VA borrowers have increased in recent quarters.  

Payroll gains continue to be concentrated in just a few sectors, government, health care, and leisure and hospitality, while other labor market data show that hiring and voluntary quits are declining, further indicating loosening in the job market.

Fed officials have pointed to their “data dependence” regarding decisions about future rate cuts. These November employment data support a cut at the December meeting and MBA forecasts that the Fed will continue to reduce short-term rates in 2025, although they are likely to slow the pace of cuts.

Mike Fratantoni (mfratantoni@mba.org); Joel Kan (jkan@mba.org)