Unemployment

The Recent Surge in Unemployment & its Causes

Introduction

Technically, the period of U.S. economic recovery was completed at the end of 2011, when GDP adjusted for inflation reached a crisis level. However, GDP per capita, as well as a number of other key economic indicators are still below the 2007 level (Sum & McLaughlin, 2010). In particular, more than three years since then, in June 2009 the U.S. economy out of recession, the country's unemployment rate remains high, the housing market remains in the doldrums, and confidence in the economy on the part of business and the population is still poor.

At the same time, in all of these areas in recent years there has been a tendency to improve the situation: real estate prices began to rise in most parts of the country, the activity in the construction sector increased (Peck, 2010). The pace of job growth has stabilized at a level of 150 thousand per month, and the unemployment rate, though still too high relative to historical norms in September for the first time since 2009 fell below 8%. If the trend continues, the per capita GDP will return to pre-crisis levels in the next year.

To achieve the pre-crisis peak of the combined wealth of U.S. households, adjusted for inflation, is expected to grow by 12%, and the total number of jobs in the economy will increase by 3.3 million. According to the forecasts of economists, by the end of 2013 the unemployment rate will fall to just 7.5% from about 7.7% currently (Petras, 2010). Even by the end of 2014 unemployment in the U.S. is unlikely to be less than 7% of the working population.

Discussion & Analyses

Economists surveyed by The Wall Street Journal, the average forecast U.S. GDP growth next year at 2.4% has been dropped against the expected 1.9% this year. The probability of accelerating growth to more than 3% estimated at only 24%, is the same as in the opinion of experts, and the likelihood of another recession. Such a low probability of recession, analysts explain the broad base of the current phase of economic growth. For the first time after the end of the recession recovery was based largely on the success of one or two sectors of the economy - at first it was the state that supported the economy afloat by huge injections, then - the industry that helped rebuild depleted stocks of goods (Grove, 2010). Recently, consumers have taken the baton and the business gradually unleashes its debts and ready to step up spending. Finally, a contribution to this year and started to make the housing sector.

Participation in the economic recovery of all its sectors virtually eliminates the risk of sudden sharp slowdown: for example, when in the spring of last year, a sudden drop in demand for American goods undermined the recovery of the industry, industry support has had a growth in domestic consumption. Now, to the extent that, as consumers, fearful of approaching the "budget cliff", the newly cut spending, the source ...