Economic Indicators

Unemployment refers to the total percentage of a country’s workforce that is unemployed and is looking for a paid job. The unemployment rate refers to the percentage of the whole population that is actively seeking paid employment. This rate is reached at by dividing the number of working individuals by the already working individuals in the work force, In statistics, a rising unemployment rate is an indicator of a weakening economy and necessitates a reduction in the interest rates. On the other hand, a falling rate indicates that the economy is growing and may necessitate a hike in interest rates.

Inflation refers to the annual increase in the prices of goods and services in a nation. An increase in inflation causes a unit of money to buy less good and services while a reduction in inflation causes a unit of money to purchase more goods and services. An increase in inflation indicates the weakening of the value of a country‘s currency, leading to higher interest rates and higher exchange rates.

Inflation is measured as a percentage change in the consumer price index of a country or region over a time period. Real gross domestic product (Real GDP) is the measure of economic output value after adjustments in regard to the price changes in an economy. It is the real value of goods and services without adjustments due to inflation or deflation. Real gross domestic product reflects the real money value in an economy and the real growth margin in the economy of a state, Nominal gross domestic product refers to the value of GDP before accounting for the changes effected by inflation and deflation.

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This value shows the level of growth or shrinking of a country’s economy but does not put into consideration the consumer buying power. This value can be misleading to a country because it does not reflect the real growth value of a country’s economy.

A trend analysis of unemployment rates, inflation, nominal GDP and real GDP were tabulated and graphed as seen below. From the graphs, it is evident that inflation and unemployment rates have a nondeterministic curve and fluctuate over time. This trend occurs because inflation and unemployment can be caused by many other factors apart from economic growth. These aspects can also be influenced by changes in international market prices, changes in technology, changes in production methods and many other factors. Showing trends of unemployment, nominal GDP, real GDP and inflation 0n the other hand, there is a linear growth in real GDP and nominal GDP over the years Real and nominal GDPs show consistent growth over the years from 1995 to 2015. This trend mainly occurs because GDP is a measure of the growth of economic productivity of a country, which increases each year.

From the unemployment graph, unemployment rates spiked during the recession period of 2008 leading to the highest unemployment rates in 2009. This trend occurred mainly because many companies had to retrench employees in order to keep up with the tightening economy. The same period reflects a reduction in the GDP amounts in the economy and a deflation of up to -1 indicating the effect of the 2008 recession After the recession, it is evident that the economy regained its strength and unemployment rates started reducing. The trend also indicates a higher nominal GDP as compared to the real GDP. This clearly shows that nominal GDP usually has additional value resulting from inflation and which needs removal in order to get the real value of the economy