The conditions of economy are often estimated by the unemployment rate in the job market. However, it is now doubted by many economists whether it could actually reflect the amount of slake in the economy.
Gauging the level of slake in the economy is very essential. First of all, the Federal Reserve supplies financial stimulus to the lagging economy. Besides, businesses, governments, employers and investors need to make strategies to adjust the economy. What’s more, Congress will set insurances and create more job opportunities.
In this way, it is of great significance to estimate the economy more accurately. The involuntary part-time workers and those who give up looking for work make the estimated economy conditions inaccurate if the evaluation only lies in jobless rate. In addition, it is found that unemployment rate will drop with the growth of wage.
Overall, while estimating the economy, more special factors should be considered instead of just counting on the jobless rate. For instance, specify every part of the labor force and think about those who may be outside the labor force system.
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