Chapter 8 Question

Chapter 8 Question

by Luke Metzler -
Number of replies: 1

Does a high unemployment rate and recessions go hand in hand or can it change depending on the situation? Because to me it seems like unemployment rates are different than how the economy is doing at that moment.

In reply to Luke Metzler

Re: Chapter 8 Question

by Danny Weaver -
Unemployment rates do go hand in hand with recessions. During expansions we see low unemployment, and during contractions we see higher unemployment. In March, the unemployment rate was ~4%, which is under the natural rate of unemployment of 5%. This is indicative of an expanding economy. That said, GDP growth has been on a downward trajectory the last few quarters, even being negative (or almost negative depending on whose figures you use) which definitionally approaching recession territory. My armchair analysis is that the can has been kicked down the road, and the plates are falling - the economy was entering recession well before Trump even passed the tariffs.