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Unemploymemt and recessions

In the chart below you can see the change in unemployment in all recessions post WWII. The median is 2.5%. That should imply an unemployment rate above 6% if the US economy enters into a recession. The fed, however is projecting an increase of less than 2%, and market consensus just 1%. In other words, they’re expecting a very mild recession even though economic conditions have tighten significantly and rapidly. And these expectations are embedded in valuations across the different asset classes, which would need to be adjusted if unemployment grows in line with past recessions.


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