Question

Despite some optimism about the seeds of​ recovery, the Congressional Budget Office​ (CBO) sees joblessness rising. The CBO sees unemployment peaking at​ 10.4% next year from an average of​ 9.3% this​ year, before it falls to​ 9.1% in 2011. ​Source: Fortune​, August​ 25, 2009 Why does unemployment continue to rise as an expansion​ begins?

Answer 1

As an expansion​ begins, previously marginally attached workers look for​ jobs, exceeding the number of people hired.

Step-by-step explanation:

• The unemployment rate is not a good indicator of the business cycle when the recession ends. However, as the economy expands, marginal workers who were not previously looking for jobs are now looking for it.
• This makes the number of jobs more than the number of vacancies. For this reason, the unemployment rate also increased during the recovery phase.