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Data Exercise

DataExercise

DataExercise

PartOne: The Unemployment Rate

Theemployment situation summary reviews the month of October 2016. Theunemployment rate for this month was 4.9 percent, which was a slightchange from the 5 percent recorded in the previous month (September).The unemployment rates for the key groups of workers during thismonth were as follows. The unemployment rate for Hispanics was 5.7percent, for adult women was 4.3 percent, for teenagers was 15.6percent, for whites was 4.3 percent, for blacks was 8.6 percent(Bureauof Labor Statistics, 2016).Apart from the unemployment rate for Hispanics, which marked a hugedecline, the unemployment rates for all the other groups exhibitedlittle change compared to the previous month.

Thedetermination of unemployment rate entails the establishment of theavailability and eligibility of the workforce. The population of theUnited States is categorized into groups namely Hispanics, whites,adult men, adult women, teenagers, and Asians. Therefore, it is noteasy to differentiate between these groups. Again, since the minimumunavoidable level of unemployment keeps on changing, it becomesdifficult to evaluate the full employment or unemployment rate. Whenpeople leave jobs for better ones, there is often no reporting thus,it is difficult to ascertain the number of unemployed individuals.

Unemploymentis an economic problem because it results in losses of income andconsumer spending in an economy. The problem of unemployment triggersfinancial costs to a country because the government is forced todisburse larger amounts of unemployment benefits or other forms ofassistance. This raises the country’s expenditure while loweringthe income because the country cannot collect significant revenues intax to a large number of unemployed people.

Themost common non-economic costs of employment include negative effectson the mental and physical health of the unemployed individuals. Thisresults in overburdening the employed family members leading toundesirable effects on family such as cases of alcoholism, drugabuse, increased crime rates and even suicide in some cases. Thevictims of unemployment are the number one losers. This is becausethe society reduces their virtual significance due to the technicalnature of changes in capitalism. However, every economic unit losesfrom unemployment because it often results in the inefficientutilization of labor. Therefore, the economy loses as a whole.

PartTwo: The Inflation Rate

TheConsumer Price Index Summary reviews the month of October 2016. TheConsumer Price Index: All Urban Consumers (CPI-U) was 0.2. The rateof inflation for the month was 0 because there was no any change inthe CPI-U from the previous month. The rate of inflation from theprevious month was approximately 0.8 percent, but for the month ofOctober, it declined further to zero (Bureauof Labor Statistics, 2016).The two categories of goods or services that had the largest pricesincreases for the month were gasoline and shelter. The gasoline indexincreased by 7 percent in October while the shelter index rose by 0.4percent. The rise in gasoline index accounted for more than 50percent of the rise in all items.

Thetwo categories of goods or services with the lowest price increasefor the month of October were food and energy. The food indexremained intact for the month with the index for food away from homerising by 0.1 percent, while the index for food at home decreased by0.2 percent. On the other hand, the index for energy rose by 3.5percent in October after a 2.9 percent increase in the previous month(Bureauof Labor Statistics, 2016).

Duringtimes of inflation, the purchasing power of consumers declines. Thisis because the real value of their wealth and money reduces.Therefore, the greatest losers from inflation include people withfixed amounts of incomes, the unemployed individuals and those withsavings or small debts. This is because, during inflation, the realvalue of money drops meaning that their savings are worth less andthat they will be forced to use a greater portion of their incomes tosettle credit. On the contrary, the greatest beneficiaries frominflation are people with a steady income, people who can grow theirincomes steadily, or people with little savings and more debt. Thisis because they can raise the level of their incomes amidstinflationary pressures, while the level of their debt reduces.

PartThree: Unemployment Data by Labor Force Groups and Duration

TableB12: Civilian Unemployment Rate, 1972-2015

Year

Males

Females

16- 19 years

20 years and over

16-19 years

20 years and over

1995

18.4

4.8

16.1

4.9

2000

14.0

3.3

12.1

3.6

2005

18.6

4.4

14.5

4.6

2015

18.4

4.9

15.5

4.8

(Councilof Economic Advisors, 2015).

TableB13: Unemployment by Duration and Reason, 1972-2015

Year

Duration of Unemployment

Less than 5 weeks

5-14 weeks

15-26 weeks

27 weeks and over

Average duration (weeks)

Median

(weeks)

1995

2,700

2,342

1,085

1,278

16.6

8.3

2000

2,558

1,815

669

649

12.6

5.9

2005

2,667

2,304

1,130

1,490

18.4

8.9

2015

2,399

2,302

1,267

2,328

29.2

11.6

(Councilof Economic Advisors, 2015).

Thedistribution of unemployment by duration over the four years in theabove table is irregular. This is because there is no steady trendthat these values are taking. Instead, they are characterized byuneven variations from one category to another. However, the averageduration of unemployment in weeks was lowest in 2000 at 12.6 weeksand highest in 2015 at 29.2 weeks (Councilof Economic Advisors, 2015).Moreover, 2015 seems to have been the year with the longest durationsof unemployment because it records the highest values of unemployedpeople in all categories except for the 5-14 weeks category.Furthermore, 2000 recorded the shortest durations of unemploymentbecause it has the least average, followed by 1995 and finally 2005.

Duringthe early 1990s, most firms downsized their operations largelybecause of mergers, government deregulations and stiff competition inthe market. For this reason, people holding jobs in companies duringthis era were prone to layoffs. This may have caused demandvariations due to the changes in the workplace. A possible outcomemay have been longer durations of unemployment. This is evident fromthe data on unemployment by duration as the average duration ofunemployment in weeks started increasing from 1990 up to 1994 when itstarted to decline again.

Theexpected increase in the population of teenagers and minorities inthe United States is likely to raise the number of individualsseeking work. This will create competition for the available jobs,which can cause mass unemployment because the number of opportunitiesavailable will possibly not be able to cater for the whole workforce.This can also increase the number of unemployed people by durationand reason. This is because it will take time for more jobs to becreated at a rate higher than that of population growth. Similarly,most people will possess identical skills making it difficult forunemployed people to find new opportunities.

References

Bureauof Labor Statistics. (2016). Employment Situation Summary. RetrievedNovember 22, 2016, fromhttp://www.bls.gov/news.release/empsit.nr0.htm

Bureauof Labor Statistics. (2016). Consumer Price Index. Retrieved November22, 2016, from http://www.bls.gov/news.release/cpi.toc.htm

Councilof Economic Advisors. (2015). 2016 Economic Report of the President.Retrieved November 22, 2016, fromhttps://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President/2016