Financial Crisis as a Cause of Unemployment in the United States

The last part of the previous decade has been a challenge for the country, at least when we talk about employment and unemployment rates. At a monthly statistic for the period of November 2009 to November 2010, at least 53% of the total number of unemployed people in the United States has been laid off. It is an alarming scenario for a country like the US to suffer such trending. While many magazines and newspapers indicate this trending to be true there were still many people who refused to believe that it was indeed happening. Today, the strength of the dollar slowly weakens from time to time when compared with other currencies which were gaining strength, such as the Canadian dollar and the Australian dollar. How has this sort of crisis affected the labor force in the country? What has triggered this trend which eventually resulted to some people being laid off in their jobs?

The financial crisis that started in 2007 is the main factor for the increasing unemployment rate in the United States, especially when we speak of those being laid off. A country’s economic strength depends on the country’s GDP, or gross domestic product. In layman’s terms, demand and supply are the indicatory marks of a nation to evaluate its GDP. Meaning, there is a good number of goods being produced and consumers have the ability to pay for those goods. The total goods being purchased, or clearly the goods being produced and paid at the same time by its consumers, are the GDP. However, the catch is that most of these consumer goods were purchased with credit cards and not actual cash. Goods were actually paid with money that is still to earn, or will be paid at a later date.

When a country has huge consumer debt, it results to bad debt and bankruptcy with lenders, and just like what happened to Lehman Brothers that lost $600 billion worth of assets due to slow returns on loans and other forms of credit, any financial institution can lay off 1,200 people from their jobs.