Will Low Unemployment Figures Prevent A Recession in 2023?

Mortgage and Lending with CMG Mortgage, San Diego, CA NMLS 259027

Will Low Unemployment Figures Prevent A Recession in 2023?

According to Treasury Secretary Janet Yellen, "You don't have a recession when you have 500,000 jobs and the lowest unemployment rate in 50 years." With the unemployment rate at 3.4% (the lowest since 1969), is Ms. Yellen correct?

CEO's think otherwise.

Over 140 CEO's were polled in the recent Q1 CEO Confidence Survey, and these notable stats prevailed:

  • 93% of CEO's are currently preparing for a recession in 2023
  • Most believe the recession will be brief
  • 55% of CEO's consider a global recession to be the biggest challenge for their companies
  • Only 37% of CEO's forecast an expansion in their workforce over the next 12 months (this number was 44% in Q4)
  • 50% are amidst and/or forecast hiring freezes

What is the correlation between Unemployment & Recessions?

Sometimes seeing is believing. In the chart below, recessions occur after unemployment numbers reach their low point time and time again. If history is any indication of what to expect, Ms. Yellen will soon have a different message to convey. Notice the dark vertical areas indicating recessions, and the low point of the white lines (indicating unemployment) which typically precede recessions.

2023 Recession - Jason Gordon Mortgage

What is likely to happen to Mortgage Rates if a Recession occurs?

History has a tendency to repeat itself, and if the past several recessions are any indicator, mortgage rates will drop in 2023. Mortgage pricing, popularity of buydown strategies and other logistics all indicate a near-universal industry forecast that mortgage rates will drop in 2023. Note that mortgage rates not only drop "during" recessions, but also "immediately following" recessions.

Recession - Mortgage Rates Will Drop in 2023 - Jason Gordon Mortgage

How much will mortgage rates drop? How soon will mortgage rates drop? One thing we've learned over the years is that there is no true way to predict the exact outcome of mortgage rates, but the above charts seem to indicate better rates between now and the end of 2023.

Credit (and thanks) to MBS Highway for the above charts & statistics

Comments (13)

Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Great talking points and data to support them, Jason. It's a great time to buy (perhaps not everyone) and I have a number of buyers ready to do just that.


Feb 09, 2023 05:13 PM
Jason E. Gordon
CMG Mortgage, San Diego, CA - San Diego, CA

Thanks Jeff Dowler, CRS 

When you read between the lines about this article, the prevailing thoughts are that 2023 will be an amazing time to buy (but I wouldn't recommend Buyer's wait until Q3 to pull the trigger).  If you ever need assistance with your Buyer's, I'm in Carlsbad constantly, and happy to help.

Feb 09, 2023 06:38 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good evening Jason,

A very interesting article and so glad you posted. I think now is a great tome to buy. I just got an accepted offer this evening in a multiple offer situation. One of the other properties I showed also went under contract. Buyers are back out and looking to purchase.

Feb 09, 2023 06:49 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I’ve heard a friend say that when there are specific causes to specific situations, we’ll just have to see what happens concerning the specific answers.

Feb 09, 2023 09:40 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Please forgive any punctuation mistakes   I’m still working out still working out the kinks my new operating system

Feb 09, 2023 09:59 PM
Jason E. Gordon

No worries whatsoever. The grammar police are taking the day off today!

Feb 10, 2023 11:12 AM
Doug Dawes
Keller Williams Evolution - 447 Boston Street Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Hello Jason E. Gordon 

Right now there are many big companies handing out layoff slips and much of the job creation is the reopening of jobs lost during the plague...imo

Feb 10, 2023 07:33 AM
Wanda Kubat-Nerdin - Wanda Can!
Red Rock Real Estate (435) 632-9374 - St. George, UT
St. George Utah Area Residential Sales Agent

Have several buyers right now, though prices are still high in this new market, Jason. Am seeing a lot of companies thinning their employee count and the jobs the government claims to have created are most of the ones that existed prior to the Wuhan flu shut down. Am not one to predict the market either.

Feb 10, 2023 12:25 PM
Edward Gilmartin
CRE - Boston, MA

They calculate unemployment strangely . If you stop looking for a job you are not counted. Looks like 74000 of the new jobs were in government also.

Feb 10, 2023 12:54 PM
Adam Feinberg

My memory is a little fuzzy here, but it was either Clinton or Bush that changed which unemployment statistic we primarily use- and no President since has wanted to change it back. I agree it's strange because if the recession impacts an area hard (geographic or even just a specific professional area), the person looking for a job might need much longer to find a new one- yet- we might not count them as unemployed anymore. 

Feb 13, 2023 09:45 AM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

The new jobs creation sounded so much better than it was - and there are so many pink slips going out these days - big numbers....  hopefully we can slide by without a recession though 

Feb 11, 2023 07:36 AM
Don Baker
Lane Realty - Eatonton, GA
Lake Sinclair Specialist

I think the feds will control that and it depends on if they actually do a budget in their means without taxing the hell out of people.  If they keep up the crazy spending of the past 10 years I expect another long recession. 

Feb 11, 2023 10:36 AM
Phyllis Ross
eXp Realty LLC Salina Group - Salina, KS
Realtor Central Kansas Residential Sales

Insightful information Jason! Thank you for sharing. Have a magnificent day and a very blessed weekend.

Feb 11, 2023 11:21 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Through out 45 years Of Real Estate ,I’ve been through numerous Recessions . Some had very little effect on our LOCAL Economy !

Feb 13, 2023 08:55 AM
Adam Feinberg
Elegran - Manhattan, NY
NYC Condo, Co-op, and Townhouse Advisor

The lowest unemployment rate in 50+ years....well no chance that can weaken, lol. Economies usually work in cycles- and while no one knows what the highs and lows will be- a typically a recession will happen after we have maxed out our tools to grow. 


Feb 13, 2023 09:40 AM