Question

The unemployments number of US for 2019 is 3.7%, and for the year 2010 is 9.7%

explain why we observe such a contrast.

Answer 1

Such a contrasting situation appears because of economic reasons. The sharp decrease in unemployment from 2010 to 2019 is because of the reason of cyclical unemployment. Employment of an economy changes due to economic reasons such as changes or fluctuations in output which occurs when the economy moves through different phases of business cycles such as growth, stability, depression, inflation etc. When unemployment happens in the recession phase of business cycle, it is called cyclical unemployment. This happens when the consumer loses their demands for goods or services which reduces the profit margins of the industry sharply as a result of which the industries try to reduce the number of employees in the organizations because of which the employees run out of job. This further causes the demand to decrease as the consumers spending potentiality is stopped due to them being unemployed.

As the economy slowly tries to recover from the period of recession it tries again to increase the spending capabilities of people, increasing demand and thus providing back to the people the employment positions. This brings down the unemployment rate slowly down and the economy slowly converts back to the normal situation.