Economic Letter

Brief summaries of SF Fed economic research that explain in reader-friendly terms what our work means for the people we serve.

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    What’s Behind the Declining Trend Unemployment Rate?

    The U.S. unemployment rate has trended down for decades. Estimates after removing business cycle fluctuations show that the trend rate fell from 7.8% in 1976 to 4.8% in 2024. This decline reflects in part a more-educated and older workforce—that is, a shift in composition towards demographic groups with traditionally lower unemployment rates. It also reflects newer cohorts entering the labor force with lower unemployment rates. Projections suggest that future demographic changes will gradually lower trend unemployment about 0.4 percentage point further over the next 20 years.

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