Answer to Question #66732 in Finance for Juan Galindo

Question

You are watching the national news with your roommate. The news anchor says, "Unemployment statistics released by the Department of Labor today show an increase in unemployment form 6.1 percent to 6.2 percent. This is the third month in a row where the unemployment rate has increased." Your roommate says, "Every month there are fewer and fewer people with jobs. I don't know how much longer the county can continue like this."

Can your roommate's statement be deduced from the unemployment rate statistic? Why or why not? What information would you need to determine whether there are really fewer people with jobs?

Answer 1

Your roommate's statement can't be deduced from the unemployment rate statistic, because it shows only the ratio between number of unemployed and labor force but not the absolute value of people without work. We need absolute number of people unemployed to determine whether there are really fewer people with jobs.