Analysis of U.S. Unemployment Rate Slow Recovery



Slow Recovery in U.S. Unemployment Rate

Introduction

The recession of 2008-2009 was very long and deep, and according to different indicators it was the most severe economic recession since 1930. The slowdown of economic activity was restrained in the first half of 2008, but as the slowdown of the economy was over taken by the financial crisis than the economy situation got even worse and accelerated the decline in the economy.

In 2009, the economy of U.S. finally bottomed out. Real domestic product almost decline to 5.1 % or $680 billion. In 2009 output gap increased and reported almost 8.1%. This economic recession was much sharper than the past recession. It was almost 10 times sharper than the post war recession. This recession proves to be the worst one.

As GDP decreases the unemployment rate increases, so after the economic recession of 2008 the unemployment rate in U.S. almost increase from 4.6% in 2007 to 10.1% in 2009. This was the worst unemployment rate that U.S. had experienced as U.S. had never experienced such decline in the employment rate before the 2008 recession. During this recession, almost 7 million people were put out of the work, and almost 8.5 million workers were pushed full time to part time. This recession cause a major financial crisis that had caused the exacerbated the negative effects on the economy. Due to this recession the stock prices also fell down, and this also led the large decline in the house hold wealth. The households wealth almost fell down about $16 trillion or about 24% in 2008-2009.

In addition, this financial decline caused an explosion in risk premiums that froze the credit flow in the economy.

The decline that economy experienced in 2008-2009 was arguably more severe than the crisis of 1929. Indeed in 1929 severe negative decline in the economy did not turn the recession in to depression.

This recession was such severe that U.S. government still could not been overcome it. The unemployment rate still could not been recovered and U.S. government still working for it. The detail of the discussion about U.S. economy is given below (Levine, 2013)

Discussion

As mentioned above the 2008 recession was the most severe one that caused a severe decline in the GDP, and according to the fact that when GDP decreases all the investments, employment rates, export rate decreases as well, and this hits the economy of the country badly. Same happens with U.S. and other countries as well that after the recession of 2008 many countries economic scale, growth rate, employment and investments declined severely.

From observing the GDP of 2009, we can say that, U.S. economic growth rate at that time started to recovered. However we can say its pace of growth was really slow. From 2009 to 2010 U.S. GDP showed the growth of only 2.5%. That was slower than the post economic recovery growth rate. If once the aggregate demand approaches the potential GDP level or the full employment, then there are chances that the economy ...