On Friday, the Bureau of Labor Statistics released its official unemployment report, which provides an analysis of the health of the job market.
The numbers have been met with great enthusiasm as the national unemployment rate fell to 3.8 percent, and the number of unemployed persons declined to 6.1 million.
The Federal Reserve has taken notice of the strengthening economy and the unemployment rate’s mostly downward slope since October 2017, and it’s almost guaranteed to raise interest rates later this year.
Considering the U.S. unemployment rate is currently 3.8 percent – and economists expect the rate to continue to drop – a zero percent unemployment rate might seem good for the economy.
If someone you know recently walked away from practicing law to pursue their dream of making it big on Broadway, that’s an example of frictional unemployment.
When the economy experiences a recession – which some economists argue is a good thing – and workers are laid off, there is cyclical unemployment.
So although there are some obvious benefits to a negative unemployment rate, a positive percentage is actually a good thing for the economy.