A Brief Note On U.s. Unemployment Rate

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Kaimeng Xing Analysis on U.S. Unemployment Rate Econ 2002.03H Nov. 9th, 2014 Since the financial crisis in 2008, U.S. unemployment rate has been an issue of importance and public concern. Why? Because the unemployment reflects current economic situation and people’s well-being in general. In this analysis, I will briefly discuss the definition of unemployment and the impact of high and persistent unemployment. Then I will analyze the trend of U.S. unemployment rate of recent months. I will also discuss different theories that explain the current trend of unemployment, some concerns and implications regarding the unemployment rate. Unemployment happens when an individual who actively searches for work but unable to find one. In modern…show more content…
Now it is clear to see why the unemployment rate has been closely monitored all the time, especially at the time of crisis. The unemployment rate, after reaching its peak in October 2009, has been declining slowly but steadily, as U.S firms keep adding more jobs to the market. There was a small increase in unemployment rate in July this year (the Wall Street Journal, Aug 4th, 2014), but the unemployment rate continues to fall in the following months, and finally in this September, it falls to 5.9 percent, the first time it has been below 6 percent since July 2008 before the financial crisis (The Huffington Post, Oct 3rd, 2014). In October, the employment continues to drop, reaching 5.8 percent at the end of the month (BBC, Nov. 2014). Most of people are excited about this falling trend of the unemployment rate, believing that falling unemployment rate is a sign of economic growth for the following reasons. First, according to the Federal Reserve, the natural rate of unemployment in the United States is estimated to be 5.2 percent to 5.5 percent. Natural rate of unemployment is unemployment that is inevitable in modern economy as people change their jobs and industries emerge and fade away. Achieving the natural rate of unemployment is considered as an indicator of a well-functioning, healthy and efficient economy. An unemployment rate that is approaching the natural rate of unemployment provides a strong argument of economic recovery. Second, the textbook
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