Key Concepts in Economics

According to the article by Schwartz (2016), the United States unemployment rate crossed the 5% mark. In particular, owing to a steady decrease in employment and having healthy employment, the rate of wages substantially increase, which is an indication that the job market might be tightening substantially to compensate more to attract and retain workers. Secondly, the unemployment rate declined to its lowest of 4.9% in the past eight years (Schwartz, 2016). The past half-year have been the paramount protracted period for employee remunerations from the time when the recovery started six-and-a-half years ago. The third key point is that economists have pointed out that this decline in the unemployment rate are a suggestion that the United States economy has been steadying up well despite the fact that the Chinese economy has been experiencing a slowdown, the increasing risks in the emerging markets, and also volatility in the stock market (Schwartz, 2016). In addition, the significant improvement in the economy can be perceived in the increase in the number of jobs as well as a major decline in the unemployment rate from 2009.

There are various economic concepts that can be applied to the points highlighted above. The first economic concept is unemployment. Unemployment takes into account a circumstance where factors of production are willing and capable of being employed at the ruling market wage rates but are involuntarily unutilized or under-utilized. The unemployment rate solely attempts to measure involuntary unemployment. The number of unemployed individuals will rely on the rate of expansion of work prospects, which in turn relies on the rate of growth of the economy, the production technique utilized, and government policies (Arnold, 2010). As pointed out in the article above, the unemployment rate in the American market has improved and declined to 4.9%. Part of the improvement in the aforementioned unemployment is in hidden unemployment. This can be defined as the unemployment that takes place when the work available to a certain workforce is insufficient to keep it fully employed so that some members of the workforce could be withdrawn without loss of output. As pointed out by O'Sullivan et al. (2010), in the course of period of poor economic performance and slow economic growth, the level of unemployment substantially rises and becomes a cause of public concern. On the other hand, in the course of good economic performance and rapid economic growth, there is a decline in employment, but does not disappear altogether. Therefore, the decline in the unemployment rate is indicative of a period of economic performance in the United States.

The concept of unemployment would have an impact on the United States economy in various ways. Owing to the 2008 financial crisis, the United States economy experienced its highest rate of unemployment as it hit the 10% mark. However, eight years later, the economy experienced its lowest mark in the period as it hit the 4.9%. This is indicated in the illustration below:

Statistics indicate that in December 2015, there was an increase of 262,000 jobs and in the following month January, there was an increase of 151,000 jobs. This constant increase in the rate of employment indicates the improvement in the health of the United States economy. According to Schwartz (2016), the unemployment demographics in the United States indicate that teenagers between the ages of 16 and 19 years experienced the greatest decline in unemployment with 2.9%age points. The black unemployment individuals followed with a decline of 1.5%age points, followed by the Hispanic, White and lastly Asian groups. In addition, statistics indicate hidden unemployment. With respect to individuals working part time, but want full-time work, experienced the greatest decline in unemployment getting to 11.7%. On the other hand, individuals who presently want a job experienced a 4.7% increase in employment (Schwartz, 2016).

The amalgamation of increasing remuneration with a sluggish pace of hiring and plunging pressure on prices from a stronger dollar confounds the depiction for the Federal Reserve as it ponders on its subsequent interest rate rise. A key concern for investors with regard to this perception of an economic growth is that the economy of China has been weak in recent periods. Taking into consideration that China is one of America's biggest trading nation, there are apprehensions that this might have an adverse impact on the U.S. economy. In addition, there is the concern of the decline in the prices of oil together with the substandard figures in retail sales (Schwartz, 2016). This is largely because oil and gas drillers had to dismiss and lay off over 2,000 employees solely in January and this was significantly adverse as it eradicated four years of employment gains. In general, the mining industry, which encompasses the oil industry experienced a loss of 146,000 from late 2014 (Schwartz, 2016).

According to The Balance (2017), the unemployment rate is projected to decline to 4.5% in the 2017 and 2018 fiscal years. This will be a slight improvement in the preceding rate of 4.9% and significantly better compared to the 6.7% target set by the Federal Reserve. With respect to the American job market, it is expected that a great deal of increase in employment will lie in the low-compensating retail and food service industries. Taking into consideration that from the time of the financial crisis and the subsequent recession, numerous individuals have been unemployed for a significant period, they will not be able to go back to the high compensating jobs they had before. The implication of this is that there is an increase in structural unemployment. Considering that the rate of unemployment will continue at a natural rate, it is expected that the economic outlook of the United States is healthy. This is bound to have a positive impact on the Gross Domestic Product (GDP) of the United States. In fact, it is projected that the GDP growth rate will increase to 2.1% in the 2017 fiscal year. This will be an improvement in comparison to the 1.9% projected rate of 2016 (The Balance, 2017).