Question

The Bureau of Labor and Statistics (BLS) calculates the unemployment rate for the United States. For June of 2020, they published numbers that were close to the following:

Civilian noninstitutional Population = 260 million
Labor Force = 160 million
Employed = 142 million
Unemployed = 18 million
Retired = 60 million

A- Calculate the unemployment rate and the participation rate for June of 2020 in the US using two decimal places (3 points each).

B- The United States have gone into a recession starting in February of 2020. Before then, we were enjoying "full-employment". Thus, we can infer that the Coronavirus increased which type of unemployment? Explain your answer in 2 lines (4 points).

C- How many adults were NOT in the labor force? Who are these people?

Answer 1

A.

The unemployment rate = Unemployed/Labor force

=18 million/160 million

=11.25%

The labor participation rate = labor force/Civilian noninstitutional Population

=160 million/260 million

=61.54%

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B.

It is known that the United States has gone into a recession starting in February of 2020, prior to which the United States was enjoying "full-employment".

Thus, one can infer that the Coronavirus increased cyclical unemployment.

It shall be noted that the recessionary phase is one of the phase of the business cycle. In the recession phase, all the economic factors, such as production, prices, saving, and investment, start decreasing. Generally, producers are unaware of a decrease in the demand for products and they continue to produce goods and services. In such a case, the supply of products exceeds demand. If there is a recession and therefore an increase in unemployment associated with a decrease in output, this results in more scarcity. This is not good for the economy since it will be producing at a point inside its production possibilities curve or at a level of output short of the full employment level.

C)

60 million adults are not in the labor force. These are the people who retired.