The economic concept involving unemployment is quite simple. When an economy is growing and is in an expansion, unemployment is usually falling; when an economy is in a recession, unemployment is usually raising, although often in a lag (Colander 140). Unfortunately, due to the events of September 11th, there was no lag. The Labor Department's November job report showed that businesses lopped off another 331,000 workers from their payrolls last month, after shedding 468,000 in October. Losses of this size are only seen in recessions. Plus, the unemployment rate continued its upward climb, reaching 5.7 percent. That is up more than a full percentage point since July, and the rate is sure to peak at well over 6 percent in 2002.
Many of the job loss occurring in the labor market today are cyclical in nature. The fluctuations in our economy (who am I kidding-I mean the sudden drop) due to the terror attacks on September 11th have created the largest sudden job loss in a few decades. It is like a vicious cycle-the economy deviates, people lose their jobs, then people quite spending, and business suffers, which creates a recession. However, the American economy has a habit of rebounding strongly. Since 1945, growth of 5-7 percent has been common in the year following a downturn. But there are good reasons why this particular recession could end rather more sluggishly. The labor market is still weakening dramatically. Unemployment rose to 5.7 percent in November and more than one million Americans have lost their jobs since September 11th alone. If we look to the past, history suggest the jobless rate is likely to rise quite a lot further. Economists have been pointing out that in recessions unemployment has typically risen 3.2 percentage points over an average period of 18 months. If that average holds in this downturn, the jobless rate would continue to rise until March 2002, peaking at 7.1 percent (Economist 23).
One would expect ...
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