Three Key Factors That Will Define The New York Times: Three Key Factors That Will Define Them”

MACROECONOMICS 1 MACROECONOMICS Macroeconomics Name of the Student Name of the University Author Note Introduction: 2 Article Summary: 2 Economic Analysis: 3 Critical Evaluation: 4 Conclusion: 5 References: 6 Introduction: The chief focus of this report is to analyse the concept of given article with the help of economic concept. As a result, the unemployment rate has remained low at 3.7 percent while the percentage of employed people has increased by 0.2 percent. As the demand for labour

Running head: MACROECONOMICS
Macroeconomics
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction:...............................................................................................................................2
Article Summary:.......................................................................................................................2
Economic Analysis:...................................................................................................................3
Critical Evaluation:....................................................................................................................4
Conclusion:................................................................................................................................5
References:.................................................................................................................................6

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Introduction:
The chief focus of this report is to analyse the concept of given article with the help of
economic concept. The New York Times has published this article under the heading, “Three
Key Factors That Will Determine How Long the Hot Job Market Lasts”. The reporter has
focused on various issues related to job markets of America from both macroeconomic and
microeconomic perspective (Nytimes.com). However, the report selects the concept of
Phillips curve and its implication over the entire country. This economic concept represents
an inverse relationship between unemployment rate and inflation rate. This report divides
entire analysis into some headings to understand that whether Phillips Curve can successfully
describe the situation or not.
Article Summary:
The given newspaper article describes the job market of America in October, 2018.
The increasing number of jobs has employed many people while the country has reached at
the full employment level (Nytimes.com). As a result, the unemployment rate has remained
low at 3.7 percent while the percentage of employed people has increased by 0.2 percent.
This in turn increases demand for labours in labour market and increases wages significantly.
As the demand for labours increases gradually in labour market, the average wages per hour
also increases to above 3.1 percent compare to the last year, which was, 2.8 percent. This
implies that the American labour market has reached to a strong position after 18 years
(Nytimes.com). Moreover, the inflation rate of this country increases and this in turn
influences the Federal Reserve to increase interest rates for controlling this inflation rate
further. According to Jude and Khan, a country can experience inflation when average price
level for a specific basket of good increases continuously for a certain period of time (140).
This economic phenomenon can be occurred due to two different causes, which are cost-push
inflation and demand-pull inflation. In this context, the country experiences cost-push

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inflation, as wages increases. Instead of this, the article has argued that inverse relationship
between inflation rate and unemployment rate has helped American economy to keep
unemployment rate at a lower level (Nytimes.com). Though inflation has provided a positive
impact in American economy, it is not accepted that this rate will remain always high.
Increase in inflation by small percentage can help an economy to develop through improving
national income. For this, it is essential to know that how many workers can come back into
job market after increase of wages. If the job market can grow further then the entire
economy can sustain with higher rate of inflation without any economic problem.
Economic Analysis:
According to Sáinz, inflation comes when an economy grow. As a result, the
economy generates more employment opportunity and this in turn reduces unemployment
within economy (25). The following diagram represents this inverse relationship between
inflation rate and unemployment. This curve represents that price inflation of an economy
changes when unemployment rate changes within the economy.
Figure 1: Phillips Curve
The above diagram has represented an inverse relationship between inflation and
unemployment. In above figure, I represents inflation rate while U represents unemployment.
As per the concept of Antoine, Bertille and Otilia Boldea , when inflation rate decreases from

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I to I1 the unemployment rate increases from U to U1 (275). The main consequence can be
described precisely. In 1960s, fiscal stimulus led the aggregate demand within economy to
increase and the economy grew significantly. As a result, demand for labour increased in
market and consequently the rate of unemployment started to reduce. Blanchard has stated
that to attract small number of skilled workers, firms increased wages and this further
increased corporate cost (32). To compensate these increasing corporate costs, companies
increased prices of products for which the economy experienced inflation.
Critical Evaluation:
America has experienced significant growth within economy and this in turn has
increased demand for labour. In this context, Karlsson and Pär Österholm state that
unemployment rate reduces. Moreover, this increasing costs due to inflation increases
aggregate price level in American economy and consequently the economy experiences
inflation. This process will continue until the American economy experiences any condition
of stagflation. However, the author expresses his concern regarding the continuous growth of
inflation.
According to the article, increasing wages have attracted working group aged between
25 years and 54 years, and consequently the total number of workers in American economy
has increased from 79.3 percent in September to 79.7 percent in October. This amount
reaches to almost 80 percent (Nytimes.com 1). This percentage is very close to the maximum
percentage of employment that has occurred during the last peak of American economy. In
2007, this percent was 80.3 percent. Therefore, it could be a vital question among economists
that how long this American economy can grow significantly. The country may experience
stagnant economic growth, which further can increase both unemployment as well as price
level (Mankiw 85). Thus, the present situation of American economy can leads it to
experience the condition of stagflation. Therefore, the author of this article provides a clear

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overview about the present concept of inflation rate with its inflation rate. Moreover, this
article also describes the future condition of America’s job market with economic concept.
Conclusion:
The entire discussion can be represented briefly to under the situation more precisely.
The American economy is growing significantly. This in turn reduces the number of
unemployment through generating more employment opportunity. The country is also
experiencing high inflation over the year. This situation can be described with the help of
Phillips curve. According to this economic model, unemployment rate and inflation rate has a
stable as well as inverse relationship. This situation can be explained with the help of an
inverse curve. American economy accepts higher inflation due to its positive impact on the
country. However, the author has argued that job market in America has almost reached to a
saturation level beyond which it cannot receive employees. The economic growth will reach
to a stagnant position and this in turn can generate the condition of stagflation within
economy. Therefore, the government could provide special emphasis on this issue.

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References:
"Three Key Factors That Will Determine How Long The Hot Job Market
Lasts." Nytimes.com. N. p., 2018. Web. 30 Nov. 2018.
Antoine, Bertille, and Otilia Boldea. "Efficient estimation with time-varying information and
the New Keynesian Phillips Curve." Journal of Econometrics 204.2 (2018): 268-300.
Blanchard, Olivier. "The Phillips Curve: Back to the'60s?." American Economic
Review 106.5 (2016): 31-34.
Eggoh, Jude C., and Muhammad Khan. "On the nonlinear relationship between inflation and
economic growth." Research in Economics 68.2 (2014): 133-143.
Karlsson, Sune, and Pär Österholm. Is the US Phillips Curve Stable? Evidence from Bayesian
VARs. No. 2018: 5. 2018.
Mankiw, N. Gregory, and Ricardo Reis. "Friedman's presidential address in the evolution of
macroeconomic thought." Journal of Economic Perspectives 32.1 (2018): 81-96.
Parkinson, Cody. "An examination of the Phillips curve using city-level data." Monthly
Labor Review (2018): 1-2.
Sáinz, Juan Pablo Pérez. From the finca to the maquila: labor and capitalist development in
Central America. Routledge, 2018.