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Unemployment in America

The rate of unemployment in America continues to decrease as economic growth remains strong. The rate of unemployment rose to 10% during the great recession and remained low during the recovery since some of the unemployed were not looking for jobs and, therefore, could not be categorized as jobless. The sturdiness and longevity of the American recovery has been a great contributor to the low rates of joblessness in the country. The government has consistently increased the number of jobs every year due to the constant growth in the economy. The recent tailwinds like the increasing global growth is also a great contributor to the decreased rate of unemployment. The tax cut introduced by Donald Trump is also a fiscal stimulus that has seen a great number of jobs get created since its introduction (Economist, 2018).

According to the Economist, the Federal Reserve deserves most of the credit for its patience (Economist, 2018). The article suggests that most countries have a ‘natural’ rate of unemployment that the flexibility of the labor market determines. The rate of inflation in the country starts to rise when the rate of unemployment falls below its ‘natural’ rate (Economist, 2018). For America, economists believe that the rate of unemployment coincides with the rate of inflation since the Federal Reserve has placed a 5% ‘natural’ unemployment rate. Therefore, the Feds are bound to increase inflation when the rate of unemployment goes below the natural 5%.

Based on the article, the American economy is one of the best in the world and is bound to remain that way if all factors remain constant. The initiatives that the government has been taking through the Federal Reserve and job creation have been effective in reducing the rate of unemployment in the country. Despite the challenges that the country faces in terms of illegal immigration, employment does not seem to be a challenge and seems to be the root of the troubles the country is facing due to the availability of jobs.

References:

Economist. (2018, December 10). Why American unemployment is so low. Retrieved from https://www.economist.com/the-economist-explains/2018/12/10/why-american-unemployment-is-so-low

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