Inflation rate refers to the situation where goods and services in the economy experience a general increase in price levels. Unemployment rate refers to that representation of the work force that is unemployed but is actively looking for work. The paper will discuss inflation rates and unemployment rates in the USA and UAE for the last five years.
Inflation Rates
The USA has seen a declining inflation rate in the recent years. This is contrary to the UAE, where the rate of inflation has increased in recent years. The average inflation rate in the USA in 2010 was at 1.6 %, while that of UAE was at 0.95%. USA saw its inflation rate increase in the year 2011 to 3.2%, while the inflation rate of UAE declined in 2011 to 0.88% (The World Bank, 2015). In 2012, the inflation rate of UAE declined further to 0.67%, while that of the USA declined to 2.1% as compared to the previous year. While the inflation rate of USA declined, further in the year 2013 to 1.5% that of UAE increased to 1.1% during the same year.
In 2014, UAE saw its inflation rate increase further to 2.35% as compared to the previous year. On the other hand, the inflation rate of the USA increased slightly to 1.6% in 2014. The inflation rate stood at -0.1% in the USA in the month of March 2015, while during the same month, inflation rate stood at 4.32% in the UAE (The World Bank, 2015).
Reasons behind the Inflation
The recent increase in the UAE inflation rates is attributable to the increase in the prices of clothes, education, alcohol, food and soft drinks in the recent past. This led to the increase of consumer prices higher in the economy. Housing and utility prices increase has also contributed to the increase in the inflation rates for the UAE. The declining inflation rates in the USA in recent years, is attributable to the fall in both oil and gas prices over time. The changes in the prices of used cars and trucks as well as medical care service costs have also contributed to the fluctuation in the USA inflation rates in recent years (Jaffe, 2012).
Impacts of such Inflation
The decrease in inflation rates in the USA is an indicator of reduced cost of living in the country, since consumers can purchase goods at lower prices as compared to previous years. In contrast, the increasing inflation rates in the UAE may imply an increased cost of living for the consumers in the economy (The World Bank, 2015).
Government’s role
The USA economy controls inflation as well as avoiding recession. The economy, achieves this through contractionary monetary policy. This helps to slow economic growth by use of open market operations. The UAE government has already taken measures to control inflation in the economy and its monitoring the rising rent prices so that it can step in and control the actions of the money hungry house owners (Jaffe, 2012).
Unemployment Rate
The USA unemployment rate has declined over time, while that of UAE has increased in recent years. In 2010, the rate was at 9.6% in the USA while in UAE it stood at 4.3%. In 2011, the unemployment rate decreased in the USA to 8.9%, while that of UAE increased to 4.6%. The UAE rate in 2011 was the all time high for the country. USA saw its rate decline further to 8.1% in 2012 while that of UAE decreased to 4.2% during the same year (Tong, 2012). In 2013, the unemployment rate in UAE remained constant at 4.2%, while that of USA decreased further to 7.4%. In 2014, the rate declined further in the USA to 6.2%, while that of UAE decreased slightly to 4.17% (Li, 2013).
Labor Groups
Unemployment in the USA affects almost all labor groups, but it is highest among the teenagers at 17.5 percent as compared to that of adult men and women that stood at 5.1% and 4.9 % respectively. On the other hand, in the UAE the Unemployment rate has been high among the youth aged between 15 and 25 years as well as that of the UAE nationals (Tong, 2012).
Addressing the Problem
The USA government announced the mixture of training, work experience and a guarantee of interviews among the youth for the coming years in order to address the youth unemployment levels. The UAE government is trying to address the issue of unemployment among the youth as well as regulating the expatriate labor in order to facilitate employment for the UAE nationals (Matiur, 2014).
Unemployment Problem
It is obvious that both USA and UAE have unemployment problems for the youth. Youths below 25 years accounts for 15 percent of the two countries unemployment rates. In the UAE, there is also the problem of unemployment among the UAE nationals.
In summary, both the USA and UAE have experienced different rates of inflation and unemployment over time. Both countries have also put mechanisms in place in order to address the issue of unemployment and inflation.
References
Jaffe, A. & Miller, K. (2012). The Arab Awakening and the Pending Oil Pinch, Seton Hall Journal of Diplomacy and International Relations , Vol. 13, No. 1. Web.
Li, J. (2013). Analysis of the High Unemployment Rate in the USA, World Review of Political Economy, Vol. 4, No. 2. Web.
Matiur, R. Muhammed, M. & Stephen, C. (2014). Influences on unemployment rates and S&P 500 Movements on eight selected individual US Casino stock performances, Journal of Business Strategies, Vol. 31, No. 1. Web.
The World Bank, (2015). Inflation, consumer prices (annual %). Web.
Tong, C. H., Tong, L. & Tong, J. E. (2012). High Unemployment in the United States: Causes and Solutions, Academic Journal Competition Forum, Vol. 10, No. 2. Web.