Cyclical Unemployment: Causes, Examples and More

Unemployment has many types, causes, and specific features. While the pandemic and its aftermath created considerable economic shifts, unemployment has always

ebbed and flowed for several reasons. With the word "recession" in the air, you may wonder where cyclical unemployment falls on the spectrum and what it entails. Read

on for more about:Definition and cyclical unemployment examplesCauses of cyclical unemploymentWays to prevent cyclical unemploymentWhat is cyclical unemployment? Cyclical

unemployment is the percentage of people without work during an economic cycle. Economic activity typically follows the fluctuations of the gross domestic product (GDP). When the

GDP experiences a significant fall, layoffs and sometimes even a recession can follow. As economists study and predict trends toward cyclical unemployment, the government

may employ its policymakers to create new fiscal policy and monetary policies to promote a more robust labor force and overall economic upswing.The stages of cyclical

unemployment Because cyclical unemployment fluctuates and follows a pattern, it looks relatively similar each time it occurs. Read below for the stages of cyclical

unemployment.1. A recession begins Recessions can be caused by many things — some from a burst in the economy, like the housing market crash of the Great Recession, and

others are a slower burn of the business cycle. Either way, consumer demand is down, which makes jobs more scarce because there is a higher amount of people in the workforce

than there is demand for goods and services.