Unemployment Rate News and Articles
Calculations of the unemployment rate can be as controversial as they are varied. Critics of government calculations complain that the rates are artificially and craftily lowered, for political reasons by excluding those who have given up looking for work, those who benefits have expired or those who have ceased to report to unemployment offices.
This employment data is used by private employers to predict talent availability, consumer demand, and to forecast economic strength or weakness. The stock market reacts to the unemployment rate mostly due to its effect on consumer sentiment and expected demand for goods and services. It is also used by economists, legal scholars, and social scientists to analyze and predict large demographic shifts, pay inequalities, and job trends, as the information is usually accompanied by a wealth of demographic and geographic data, including retirement and retention rates, worker mobility and average hiatus between jobs.
From a broader economic perspective, in classical economic terms and in some scenarios, the unemployment rate correlated inversely with inflation-the explanation being that "demand-pull" inflation-a steady and broad rise in prices due to unmet consumer demand-requires increased production and therefore increased hiring, which tends to bid prices up. This is part of the rationale underlying what has been called the "Phillips Curve", which has been used to map historical unemployment rates against inversely correlated inflation rates.
Because of the phenomenon of "stagflation"-high unemployment and high inflation, the Phillips curve is now regarded as too simplistic, in addition to being susceptible to shifts to higher levels of both unemployment and inflation. In any case, it's validity has been described as being limited to short-term relationships between unemployment and inflation.
Of course, "cost-push" inflation, e.g., a general increase in prices due to costlier factors of production, including raw materials, the cost of borrowing and of labor itself [e.g., because of training required or risk premiums for dangerous work], can create unemployment. One example is when profit margins become too thin, due to such rising costs, necessitating downsizing or company closure.
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