Macro Paper How unemployment rate 2010

Topics: Unemployment, United States, Gross domestic product Pages: 8 (1535 words) Published: September 13, 2014

How the Unemployment Rate Affects a Countries Economy
In 2010

This paper is about how the high unemployment rate has an affect on the economy. The high unemployment rate had an affect on the Gross Domestic Production as well how it had an affect on the economy as well. This paper covers when the Gross Domestic Production went up the unemployment rate had gone down as well. The high unemployment rate also had direct ties to the economy, because if people are not working they are not going to spend money on house hold goods which is what drives the economy.

How the Unemployment Rate Affects a Countries Economy
There are many reasons why a countries economy could be in a down fall and one of those reasons is the fact that a countries unemployment rate is up. The unemployment rate is intertwined with the economics of a country. There are three things that we are going to look at with the unemployment is how it affects gross domestic product or GDP for short, the affects of unemployment on the economy, and how to try to combat unemployment and creating jobs.

The gross domestic product is affected by unemployment because if people are not working they are not buying goods. When a person is unemployed they are more concerned with saving money rather than spending it on goods. They choose to spend that money on the necessities such as paying their rent, buying food, or paying their bills. The GDP measures the value of good that are produced with the country. They take a measurement of the values of those goods that are produced with in the countries borders. When the GDP goes up it tend to create jobs and lower the unemployment rate. The problem that is faced right know in the country is that its going to take a significant growth in the GDP for the unemployment rate to lower itself. The Unemployment rate is at 7.9 percent right now. Economists predict that its going to take about 3 percent of gross domestic production to rise in order for the country to keep the unemployment rate to drop and jobs to be created in order to keep up with the population. In order to drive the unemployment rate down just one percent the GDP has to go up nearly five percent for the whole year. The last recession that the United States had was in the early 1980s when the unemployment rate was 10.8 percent. At that time the GDP had grew from 7 to 9 percent for five straight quarters and the unemployment rate hade gone from 10.8 to 7.2 percent in a year and half. As of today, the consumer spending as gone up about 2.2 percent for the at the end of January showing some progress that the economy might be at a comeback.

Unfortunately since the recession had started almost a quarter of 8.4 million jobs were eliminated. The jobs that were lost will have to be replaced by other jobs in other growing industries. The problem is that jobs were also lost to the over seas jobs such as China. Luckily some projections are showing job growth will increase slightly this year. Economists are predicting that about an average of 153,000 jobs will be added every month, but the unemployment rate will not drop significantly. It will only drop about .3 of a percent. It’s going to take about 200,000 jobs in order for the United States to make a strong recovery in the job market. It is going to take more incentive for companies to create more jobs and to stop going overseas and giving other jobs to other countries. Companies are doing a lot of outsourcing to a couple of different countries such as China, India, and Indonesia in order to make a profits and not have to pay individuals as much money as they would have to in the United States for labor. Companies are looking for way to have cheap labor in order to make money. The problems with these companies are as they use these other countries to make their goods they are...

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Phil Izzo, (2010, February 11). Economists Say Many Lost Jobs Won’t Return. Wall Street
Swell Chan. (2010, April 18). Unemployment is Tied to Big Drop in Demand. New York Times
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