Unemployment

Unemployment describes the state of a worker who is able and willing to take work but cannot find it. As indicated by the unemployment rate and other yardsticks, unemployment is an important measure of the economy's strength. A high unemployment rate generally indicates an economy in recession with few job opportunities, while a low unemployment rate points to an economy running at or near full throttle. A low unemployment rate has its downside for stock prices, however: it may be a harbinger of higher interest rates that will slow both an overheated economy and the rise in equity values. In recent years, there's been much controversy over what the true level of U.S. unemployment is. Some economists have relied more on the government's "establishment survey data," which emphasizes the number of new jobs, rather than "household survey data," which is used to compute the headline unemployment rate. Moreover, new technologies and lifestyle changes, which are increasing the number of temporary, contract, and self-employed workers, are making it more difficult to define what unemployment is.

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