Growth and Unemployment

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The article Growth and Unemployment explains how the economy had gained back its growth with rising unemployment rate. From the chart that the author shows us, we know that when GDP growth is low, unemployment rate stays at high levels; when GDP growth is high, unemployment rate stays at low levels. Rapid GDP growth keeps unemployment rate from rising due to increasing productivity: firms have more advanced technology. That means firms can produce the same amount of products with fewer labors. That is how people feel the economy growth increasing while the unemployment rate going up. As we talked about in class, the unemployment rate is the fraction of the labor force which is unemployed, one reason the unemployment rate keeps the upward trend is that the working-age group growing rapidly. Unemployment rate does not reflect the performance of our economy 100% right.