Unemployment, GDP Growth, and USD Value (2011 & Early 2012)
The U.S. Federal Reserve is on record stating that there must be a significant increase in employment before the economy improves. Looking at the chart below, the evidence appears to support the Fedâ€™s position.
GDP growth increased in each of the past four quarters with the greatest gains coming right after unemployment declined sharply in Q4 2011. Heading into 2012, employment gains appear to have stalled in January and February, with both months recording an unemployment rate of 8.3%. Does this indicate GDP growth will likewise stall, as per the Fedâ€™s view?
Also of interest is how these factors affect the U.S. dollar. The USDâ€™s historical use as a â€œsafe havenâ€ currency is likely responsible for some of the gains against the euro in the past four months. Investors will be watching closely to see if the trend continues into the next quarter.
Created by OANDA