Analysis of Unemployment Rate and Business Cycle in the US Economy

This report analyzes the relationship between the unemployment rate and the business cycle in the United States. It discusses the different types of unemployment, including frictional, structural, and cyclical, and how they relate to the overall economy. The report highlights the current low unemployment rate in the US and attributes it to the expansion phase of the business cycle, influenced by factors like trade policies. The business cycle is described with its four phases: expansion, contraction, peak, and trough, providing a framework for understanding economic fluctuations. The report uses the current economic situation of the United States as a case study to show how the different phases of the business cycle affect unemployment rates and economic growth. The report references relevant sources to support its analysis.

RUNNING HEAD: UNEMPLOYMENT RATE
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Unemployment Rate
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Unemployment Rate
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Unemployment and Business Cycle in the United States
Unemployment is the situation in the economy when people are looking for job but didn’t
get it. When people do not have jobs they are not able to contribute or produce that impact on the
economy and the economy produce less (Pigou, 2013).
Unemployment Rate = Unemployed people / Total Labor Force *100
There type of unemployment are; natural unemployment is always presence in an
economy even in the strongest economy, frictional unemployment is for the short term till labor
force finds new jobs, structural unemployment is the biggest problem as it is arise when labor
skills are outdated and do not match with the demand of skills by the employer, at the last is
cyclical unemployment that caused due to the changing phase of the business cycle. The
unemployment rate in the United States has seen to be the lowest in nearly 50 years at 2.1% due
to expansion phase in business cycle. Trump’s trade war is the reason of this long term
expansion in the economy that is creating many job opportunities for the people (Smialek, 2019).
The business cycle consists of four stages that are expansion, contraction, peak and trough.
Expansion is the stage when economy is growing and increasing employment, contraction is the
stage where growth is slow, peak is the highest stage where business is producing at the best or
maximum output, and trough is the time of recession where economy is at its low (Gabisch &
Lorenz, 2013). Currently the United States is at the expansion stage from last10 years where
there is more employment opportunities and economic growth that is the reason behind the
lowest unemployment rate of the country.
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Trough
Business Cycle in the United States
Peak
Output
(GDP)
Contraction
Expansion
Current Business
Phase in the
United States
Economy

Unemployment Rate
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References
Gabisch, G., & Lorenz, H. W. (2013). Business cycle theory. Germany: Springer Science.
Pigou, A. C. (2013). Theory of Unemployment. New York: Routledge.
Smialek, J. (2019, June 24). The Economy Is About to Hit a Record. Trump Says the Fed ‘Blew It’.
Retrieved from nytimes.com: https://www.nytimes.com/2019/06/24/business/trump-
federal-reserve.html