What do unemployment rates say about economic health?
Unemployment Rate
What is the Unemployment Rate?
The unemployment rate is a lagging indicator calculated by the Bureau of Labor Statistics. It highlights the percentage of the labor force without a job. As a lagging indicator it will rise and fall with changing economic conditions instead of predicting those changes. Unemployment rates rise when the economy is struggling and jobs are scarce. They decline when the economy is experiencing healthy growth and jobs are more readily available.
Why is the Unemployment Rate valuable?
The Unemployment Rate is valuable because it can offer critical insight into the health of the economy. It is one of the most commonly watched indicators by policy makers, investors, and the public. Each of these groups use the data presented by the unemployment rate in different ways. For example, if unemployment is on the rise, policy makers may use this information to tailor fiscal policies to mitigate the impact of a potential recession. Investors and the public will use unemployment rates to gauge the health of the economy and determine how well the government is running the country.
What should you do?
Understanding Unemployment Rates can be a useful tool for gauging the health of the economy and what’s happening in current business cycles. Majestic’s CORE Report follows Unemployment Rates; along with other indicators every week to see where the market stands.
Sources: Investopedia.com
