• jobs image by Ewe Degiampietro from Fotolia.com
  
  The unemployment rate helps economists determine the state of the economic climate and analyze where the country is going in terms of jobs and outlook. The unemployment rate gives job seekers an idea of how competitive the job market is and decide their appropriate course of action. Depending on the unemployment figures, the government may step in, offering federal assistance to jumpstart the economy.
  
  

An Economic Indicator

• The unemployment rate is one of the economic indicators used in determining the general state of the economy and its potential for growth. However, using the unemployment rate, as an economic indicator, can be somewhat misleading. In a recession, the unemployment rate does start to rise; yet even when the economy starts to recover, it isn't uncommon to see the unemployment rate continue to rise. Many firms are reluctant to lay off in the early stages of a recession. Some companies wait several months before layoffs begin. If the economic trends don't change, layoffs start and continue even after the economy improves. When the unemployment rate does eventually start to fall, this is a good sign that the economy is growing.
  
  

Individual Effects of the Unemployment Rate

• Unemployment rates have several effects on job seekers. In times of high unemployment, competition for jobs will always be more fierce than normal. Those currently employed may want to reconsider searching out a new job or making any demands that might put their current position in danger. Times of high unemployment in general are not the best times to demand pay raises or promotions. The company holds the advantage in that it knows workers will be far more reluctant to leave if their demands are not met. Watching the unemployment rate can offer individuals the chance to get prepared if they risk losing their current job. As the old adage goes, "The best time to look for a job is when you don't need one."
  
  

Government Stimulus

• Watching the unemployment rate does bring a few advantages. In a free market economy, theorists claim the economy corrects itself. The only problem is that it can take a long time for this to happen. When the unemployment rate starts to rise, the government may step in and attempt to stimulate it. Tax cuts, work programs and increasing unemployment benefits are all government programs that keep money flowing into the economy and help stimulate growth.