The unemployment rate is a key indicator of the health of a nation’s labor market. It is one of the primary factors used to determine monetary policy and other strategic economic decisions. Unemployment is measured by the government using a monthly survey of households. It includes only those who are not working but who have actively looked for a job in the past four weeks and who are currently available to work.

A high unemployment rate imposes significant costs on individuals and society as a whole, including decreased productivity, higher prices for goods and services, and less spending power. In addition, prolonged unemployment erodes professional skills and makes it difficult to return to the workforce. It can also lead to depression and other psychological problems. In the long run, high unemployment is usually accompanied by a slow economy.

In times of economic recession or slow growth, businesses may need to cut costs by laying off workers. This can have a ripple effect that affects even those who still have jobs, as consumers spend less. Conversely, economic expansion or growth increases demand for products and can result in companies hiring more people.

Economists and other researchers have argued about the causes of unemployment, with some believing that it is a natural occurrence and others advocating for government policies to lower it. Other influences on the unemployment rate include demographic changes such as aging populations, and structural trends that are independent of the business cycle, such as technological change or increased female employment.