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(supply chain)-Explain how it might be possible for the unemployment rate to drop inspire of a severe recession.




During an economic recession, the unemployment rate tends to rise rapidly and often stays high. As the economic downturn began, companies faced increased costs, stagnant or declining revenues, and increased pressure to repay debt, and they began to lay off employees to cut costs. The number of unemployed in many industries has surged at the same time. Newly unemployed workers find it challenging to find a new job during the economic recession, and the average unemployed time of workers has increased. Here, we examine the link between recession and unemployment.


When the economy experiences negative growth for two or more consecutive quarters, an economic recession occurs. It measured by gross domestic product (GDP) or other macroeconomic performance indicators (including unemployment). To some extent, the relationship between recession and unemployment is purely a matter of semantics. The official date of the recession includes an increase in unemployment, which forms part of the definition of a recession. For example, the number of unemployed increased by 17.1% to 610,500, compared with 521,300 in the same month of 2019. The unemployment rate in March 2020 rose to 3.9%. March 2020, high unemployment reflects the negative impact of MCO on the labor market. The unemployment rate in March 2020 also increased to 3.9% from 3.3% in the previous month.


During an economic recession, a large number of business closures will occur. Various economic theories explain the reasons for the failure of these enterprises. These economic theories are adverse economic shocks, actual resource or credit crunch caused by the previous over-expansion of monetary policy, the burst of debt-based asset price bubbles, or unfavorable changes in consumers Caused by or business mood. Regardless of why, as the economic recession spreads, more and more companies have scaled back their activities or failed altogether, and therefore laid-off employees.


When companies go bankrupt, in the regular operation of the market, the company's assets were sold to other companies and re-hired former employees of other competitors. The number of unemployed workers during the recession, as many companies in many different industries and markets were closed down once, so look for a new job is increasing rapidly. The supply can use supply immediately; hired labor has increased, but the company’s need to hire new workers has declined. In a perfect, frictionless market, economists expect that once the price adjustment, this increase in supply and reduce demand results will lead to lower prices but will not necessarily lead to a reduction in total employment.



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