Question

You have previously provided information on both unemployment rates and the inflation rate for the US and for your country. Put these together and draw some conclusions about the relationship between these two rates, and compare to the theoretical arguments in this chapter. Is there this tradeoff, or does the Phillips relationship not appear to be present? Why or why not?

Unemployment rate unchanged at 3.6 percent in May 2019. In May 2019, the unemployment rate was unchanged over the month, at 3.6 percent, and the number of people who were unemployed was little changed, at 5.9 million. The jobless rate was 3.6 percent in April 2019 and 3.8 percent in May 2018.

In 2020, a record 3.3 million people filed claims for unemployment in the US as the Covid-19 pandemic shut down large parts of America’s economy and the full scale of the impact of the crisis began to emerge.

Experts warned of a “catastrophic unemployment crisis” after the labor department announced jobless claims filed by individuals seeking unemployment benefits rose by more than 3 million to 3.28 million from 281,000 the previous week. The figure is the highest ever reported, beating the previous record of 695,000 claims filed the week ending 2 October 1982.

Answer 1

There is the existence of Philips relationship. That means there is trade off between unemployment and inflation. Because the unemployment rate is increasing in US. At the same time inflation rate is decreasing in US. According to US Labor Department the annual inflation rate is decreasing. It is decreasing from 1.8 percentage in 2019 in the month of May to 0.1 percentage in 2020 in the month of May. The inflation is average of 1.8 percentage in 2019 and it was 2.4 2018. So it is evident from the data that inflation rate is decreasing in United States. At the same time the unemployment rate is rose in US. That means there is negative relationship between inflation and unemployment.