Case Study on unemployment 4-6 pages
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InflationandUnemployment.edited.docxRunning Head: INFLATION AND UNEMPLOYMENT
Inflation and Unemployment
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Introduction
Unemployment and inflation are two undesired economic scenarios that cannot be fully protected against. Unemployment is a scenario where people are active and willing to take jobs but they cannot find these jobs in the market. On the other hand, inflation is steady and slow increases of costs of acquiring goods and services in the market. There is a relationship between GDP and how it affects unemployment and inflation. When GDP increases, the level of unemployment goes down due to better economic conditions and hence more job opportunities. On the other hand, if inflation keeps on increasing, there is a high likelihood of the GDP of a country reducing. Unemployment and inflation are issues that affect very many in the economy. Both whites and blacks are affected by unemployment (Singh, 2018). The rate of unemployment between whites and blacks is important for assessment due to several reasons. One, it helps in the understanding of how the rate differs between both categories It also helps who gain insights on who suffers the highest rate of employment. It also helps in the determination of the best course of action to intervene for both categories.
Data
GDP Growth Rate
|
Year |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
Rate |
1.55% |
2.25% |
1.84% |
2.53% |
3.08% |
1.71% |
2.33% |
3.00% |
2.16% |
-3.49% |
Unemployment Rate
|
Year |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
Rate |
8.95% |
8.07% |
7.38% |
6.17% |
5.28% |
4.87% |
4.36% |
3.90% |
3.67% |
8.31% |
Inflation Rate
|
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
|
Rate |
3.16% |
2.07% |
1.46% |
1.62% |
0.12% |
1.26% |
2.13% |
2.44% |
1.81% |
1.23% |
Unemployment Rate among Black or African American
|
Year |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
Rate |
15.83% |
13.83% |
13.07% |
11.34% |
9.56% |
8.43% |
7.48% |
6.49% |
6.07% |
11.48% |
Unemployment Rate among Whites
|
Year |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
Rate |
7.93% |
7.19% |
6.51% |
5.30% |
4.58% |
4.28% |
3.83% |
3.44% |
3.28% |
7.33% |
Analysis
GDP and Inflation
The GDP growth rate has been going through a series of highs and lows since 2011. The highest GDP was at in 2015 and this was at 3.08% (Luna-Benoso, Martínez-Perales & Córtes-Galicia, 2019). However, the GDP suffered its lowest growth rate this being a negative value. This occurred in 2015 when the GDP was at -3.49%.
In the same year 2015, there was the least rate of inflation in the US for the last ten year. This was recorded at 0.12%. Inflation was however at its highest back in 2011. It was at 3.16% and this has the highest level of inflation to be experienced in the last ten years.
In 2015, the high growth rate was high because of the low level of inflation. This meant people could consume more with their disposable income. This contributed to the highest GDP in the last ten year.
Unemployment and Inflation
Inflation was at its highest in 2011 and its lowest in 2015. For unemployment, it was at its highest back in 2011 and its lowest back in 2019. In 2011, the unemployment level was at 8.95% while in 2019, the unemployment level was at 3.67%. It was expected that inflation was the cause of the high level of unemployment in 2011. This is because life was expensive and businesses cot did not sustain the high cost of labor. Thus, people were rendered jobless most in this year for the last decade.
Unemployment among Black or African Americans
Inflation among Black or African Americans was at its highest back in 2011 and it was standing at 15.83%. This kept on reducing steadily until 2019 when it hit the lowest score in the last ten year. In 2019, unemployment among Black or African Americans was at 6.07%. However, it increases in 2020 to 11.48%, data retrieved from https://data.bls.gov/cgi-bin/surveymost
Unemployment Rate among Whites
The white population experienced the highest rate of unemployment in 2011. However, the rate of unemployment among white was almost less by half the rate of unemployment among the Black or African American population. In 2011, this rate of unemployment was standing at 7.93%. Just like the unemployment of Black or African American people, the unemployment rate decreased and hit its lowest in 2019. During this year, it recorded a 3.28% unemployment rate. Again, this was almost half of the unemployment rate suffered by Black or African American population, data retrieved from https://data.bls.gov/cgi-bin/surveymost.
Form the data, shows that the rate of unemployment has remained significantly high among Black or African American population than it has been for the white population. This is a worrying trend that has not changed significantly in the last ten years. This is bad for the economy because it means there could be economic forces that are biased against Black or African American population. This may be a reason they are unable to secure job opportunities.
Reflection and critical thinking
The trend of unemployment is similar between whites and Black or African Americans. Both have the same patterns as the general unemployment graphs from 2011 to 2020. However, the unemployment level among Black or African America is quite high than that of white population. For instance, in 2011, unemployment among Black or African American was way beyond the economic average. The economy's average was 8.95%, white's unemployment was at 7.93& while the unemployment among Black or African American was at 15.83%. In 2019 when the unemployment rate was its lowest, the economy's average was at 3.67%, unemployed among Black or African Americans was at 6.07% and unemployment among whites was at 3.28%.
Given these two scenarios, it is true that the Black or African American population suffer the highest level of unemployment even than the economy's average. This is an indication that it is limited and discriminated access to economic opportunities and resources for Black or African Americans.
In last year, most people lost their jobs due to coronavirus. However, Black or African Americans suffered the most. Their rate of unemployment went as high as 11.48% while the rate of unemployment among whites remained at 7.39%.
Bearing in mind that the growth rate was at its lowest in 2019 this was probably contributed by the poverty level among Black or African Americans. Since they were not contributing up to their potential, the economy was hardest hit by the Covid-19 pandemic.
Solution
First, to reduce the rate of unemployment among black people, the government should use different fiscal policies. One of these fiscal policies is reduced taxation. With reduced taxation, the production of goods and services would go down. This would imply that the inflation rate would remain considerably low and consequently, the GDP growth rate would increase (Mazhar & Méon, 2017). With an increased growth rate, there would be more job opportunities created for both blacks and white. This would help reduce the general unemployment level in the economy.
REFERENCES:
Singh, R. (2018). Impact of GDP and inflation on unemployment rate:" A study of Indian Economy in 2011–2018”. International journal of management, IT and Engineering, 8(3), 329-340.
Luna-Benoso, B., Martínez-Perales, J. C., & Córtes-Galicia, J. (2019). Gross Domestic Product in the Main Economies of Latin America (2015-2017).
Mazhar, U., & Méon, P. G. (2017). Taxing the unobservable: The impact of the shadow economy on inflation and taxation. World Development, 90, 89-103.
https://data.bls.gov/cgi-bin/surveymost
Unemployment Rate among Whites
Rate
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 7.9299999999999995E-2 7.1900000000000006E-2 6.5100000000000005E-2 5.2999999999999999E-2 4.58E-2 4.2799999999999998E-2 3.8300000000000001E-2 3.44E-2 3.2800000000000003E-2 7.3300000000000004E-2
GDP Growth Rate
Rate
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1.55E-2 2.2499999999999999E-2 1.84E-2 2.53E-2 3.0800000000000001E-2 1.7100000000000001E-2 2.3300000000000001E-2 0.03 2.1600000000000001E-2 -3.49E-2
Unemployment Rate
Rate
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 8.9499999999999996E-2 8.0699999999999994E-2 7.3800000000000004E-2 6.1699999999999998E-2 5.28E-2 4.87E-2 4.36E-2 3.9E-2 3.6700000000000003E-2 8.3099999999999993E-2
Inflation Rate
Rate
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 3.1600000000000003E-2 2.07E-2 1.46E-2 1.6199999999999999E-2 1.1999999999999999E-3 1.26E-2 2.1299999999999999E-2 2.4400000000000002E-2 1.8100000000000002E-2 1.23E-2
Unemployment Rate among Blacks
Rate
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0.1583 0.13830000000000001 0.13070000000000001 0.1134 9.5600000000000004E-2 8.43E-2 7.4800000000000005E-2 6.4899999999999999E-2 6.0699999999999997E-2 0.1148
