UNEMPLOYMENT RATE

Unemployment Rate? Recession? Depression?

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On April 3rd, 2020 in the middle of the COVID-19 Pandemic and the U.S. unemployment rate reaches 4.6%. That’s after over 6 million Americans filed for unemployment insurance benefits. And this is with the expanded unemployment guidelines.

Is the US Unemployment Rate Bad?

Well, that’s a difficult question to answer. Let’s look at the unemployment rate of previous years in the United States and answer that question.

Are We in a Recession?

A recession, as is defined in economics, is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, a pandemic (COVID-19) or the bursting of an economic bubble. In the United States, it is defined as “a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”. In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.

Are We in a Depression?

A depression, as defined in economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.

What Does this Look Like for the Future

The economic cycle in the United States is cyclical in nature. With time still left before we head back to work from this pandemic, we do know that things look like we are in for a long ride.