Also, the minimum level of unemployment before a recession is not always the same,as a recession might be triggered by a specific market event before full employment is reached. The 2008 recession happened when unemployment in the US was around 4.5 per cent, in contrast to the 3.8 per cent level reached before the prior recession. Another reason may be that the labour market has structurally changed over time, causing the true full employment level to move.
This minimum level also varies between economies, again because of structural differences in the labour markets.
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Nandini Ramakrishnan is a global market strategist at JPMorgan Asset Management
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