Question

Analyze the unemployment rate in your local area and compare it to the state and national level. Evaluate the trends in the unemployment rate for an economy. What are the implications of more individuals leaving the labor force on the unemployment rate and does it give us false impression on the economy?

Answer 1

My local Area: El Centro (CA):

El Centro has an unemployment rate of 17.9% much higher than as compared to state unemployment rate of 4.9% & national unemployment rate of 4.1%. It has one of the highest unemployment rates in the US. Out of a workforce of 79,400 people, 16,700 are unemployed, according to data released by the U.S. Bureau of Labor Statistics.

Unemployment rate is an important factor to gauge the growth rate of an economy. Unemployment rate in US peaked at 10.2 percent in October 2009. It rose steadily from its low of 4.4 percent in March 2007. It continued to increase due to contraction of the economy reaching at 10.2 percent in 2009. Since the recession of 1981 unemployment rate has not reached above 10% as in 2009. After the 2009 unemployment rate has steadily fallen to 8.5% in 2011, 7.9% in 2012, 6.7% in 2013 & 5.6% in 2014. The unemployment rate further decreased to 5% in 2015, 4.7% in 2016 & 4.1% in 2017.

The labor force participation rate (the percentage of the population that is either employed or unemployed) either working or actively seeking work in US has been declining in recent years. More individuals are leaving the labor force, mostly old age population. If more individuals leave the labor force the unemployment rate increases.

An increase in unemployment rate indicates that there is little economic growth & it determines the future prospects of the economy.