I have recently read Kelly Hu’s blog on falling unemployment rates in United States and how that may signal the rise of economic growth in the nation. Though I do agree with her view on falling jobless rate leading to levels of income and GDP, I believe she hasn’t mentioned the biggest problem this can pose in the future. This relates to the Phillips Curve wherein a change in rates of unemployment of a country will have an inverse change in rates of inflation of that country. Kelly should’ve also mentioned that a decrease in unemployment rates in US could lead to inflation of dollar ($) since they both functions as long term economic tradeoffs. Higher price levels can thus lead to lower value of money and decreased purchasing power of money.

In addition, inflation also leads to uncertainties in the future about investments and savings. Because companies focus more on profit and less on products they will decide to raise the price levels of their individual goods. This is however given that economy functions at low rate of unemployment. In order for the economy grow, not only do we require low jobless rates but also low levels of inflation.

Link related to the image: <http://www.rte.ie/news/business/2014/1107/657649-us-jobs-figures/>

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