Author: John Bouman

Unemployment Rates by State Unemployment rates in the United States vary quite a bit by state. Below is a table with 2011 – 2024 unemployment rates of selected states. The table shows that in 2024 South Dakota (1.9%) had the lowest unemployment rate. The highest rates were in California (5.4%), the District of Columbia (5.7%), and Nevada (5.7%). From 2011 – 2019 most states experienced a decrease in unemployment. From 2018 to 2019, only four states experienced an increase in unemployment (Hawaii, Maine, Minnesota, and Wyoming). Unemployment rates in most states increased in 2020 due to the pandemic and then recovered (decreased) in most states after 2021. State/Region Unemployment Rate (2011, seasonally adjusted) Unemployment Rate (2012, seasonally adjusted) Unemployment Rate (2015, seasonally adjusted) Unemployment Rate (2019, seasonally adjusted) Unemployment Rate (2024, seasonally adjusted)  United States 9.1 7.7 5.5 3.5 4.2 Alaska 7.4 6.8 6.7 6.1 4.6 California 11.7 9.8 6.3 3.9 5.4 Delaware 8.0 6.7 4.5 3.8 4.0 Florida 10.6 8.1 5.6 3.1 3.4 Hawaii 6.0 5.3 4.1 2.6 2.9 Iowa 6.0 4.9 3.8 2.6 3.1 Kansas 6.6 5.4 4.3 3.1 3.4 Maine 7.7 7.2 4.7 2.8 3.1 Maryland 6.8 6.6 5.3 3.6 3.1 Massachusetts 7.6 6.6 4.7 2.9 3.9 Michigan 10.3 8.9 5.4 4.0 4.7 Minnesota 6.6 5.7 3.7 3.3 3.4 Montana 7.3 5.8 4.0 3.4 3.2 Nebraska 4.1 3.7 2.5 3.1 2.8 Nevada 12.1 10.8 7.1 4.0...

What’s in This Chapter? The theories of John Maynard Keynes became increasingly popular as the problems of the Great Depression of the 1930s worsened. The economy was experiencing a significant downward spiral, and people were desperate for a solution. Keynes supported active government involvement primarily in the form of increased government spending, and an expansive monetary policy by the Federal Reserve System. Classical economists disagreed with this approach. They believed that government involvement had already significantly increased during the 1920s and early 1930s, especially in the areas of monetary policy, anti-trust regulations, labor laws, and protectionism (import tariffs and quotas). They blamed the severity of the Great Depression on errant government policies before and during the Great Depression. Their solution was less government involvement, less government spending, lower taxes, fewer regulations, and more reliance on free market conditions. According to classical economists, allowing free market forces to correct the problems of the 1930s would mean struggles in the short run but a stronger and healthier economy in the long run. Keynes cared more about tackling immediate problems and stimulating the economy in the short run. When asked about the long run, he responded: “in the long run, we are all...

Keynesian Economics This unit describes the Keynesian economic model. Keynes’s model was the most influential in economics in the twentieth century. It became widely accepted after the Great Depression, and was almost universally accepted from the 1950s through the late 1970s. Even some conservative economists and republicans, such as President Nixon, acknowledged during that time that “we are all Keynesians now.” Keynes (pictured) was born in Cambridge, England in 1883. He earned a mathematics degree from King’s College in 1905, worked for the British Treasury, then became a teacher, a prominent journalist, and a lecturer. In 1925 he married Russian ballet dancer Lydia Lopokova. He was made a Lord in 1942. Keynes passed in 1946. The General Theory of Employment, Interest and Money, published in 1936, was his most influential work. His ideas created the groundwork for subsequent well-known Keynesian economists such as James Tobin, Paul Samuelson, John Kenneth Galbraith, Robert Solow, Charles Schultze, Alan Blinder, Walter Heller, and Arthur Okun. Because of the influence of Keynes, the United States government passed the Employment Act of 1946. Other industrialized countries around the world passed similar acts. The Act made it official that it was the government’s responsibility to achieve full employment, stimulate the economy if necessary, and keep the nation’s price level stable. Sections 2 through 4 of this unit elaborate on Keynes’s model. Since the 1980s, the Keynesian model has...

Keynes’s General Theory John Maynard Keynes wrote  A Treatise on Money (1930) and his most famous work, The General Theory of Employment, Interest and Money (1936), around the time of the Great Depression. During the Great Depression, many economists and politicians looked for answers to solve the disturbing output declines and unemployment increases. His economic views led our government to pass the Employment Act of 1946, which established the Council of Economic Advisers and made the federal government responsible to intervene in the economy when necessary. Before Keynes The classical economists, whose thoughts were widely accepted in Western economies before the 1920s, and whose theories have recently gained support again, believed that economic downturns can best be solved by leaving the economy alone and letting private market forces correct the problems. A self-correcting mechanism (Adam Smith’s “invisible hand”) is in place, which allows for only minimal government involvement in the economy. The classical economists base their conclusions on assumptions that in a free market, wages, prices, and interest rates are flexible and adjust according to demand and supply of products, labor and other resources, and money in circulation. The 1930s As the economic problems grew more serious during the 1930s, interventionist economic theories gained more acceptance. Big businesses and their “robber baron” business leaders began to be seen as the cause of all economic evil. People started to look toward the...

Keynes Emphasized the Demand Side The Keynesian model is based on the belief that demand drives the economy and that a shortfall in demand causes recessions and depressions. According to Keynes, if we can find ways to stimulate consumption and other forms of spending, we will solve the problem. The Marginal Propensity to Consume (MPC) Keynes discussed the Marginal Propensity to Consume (MPC). The MPC indicates how much of any additional earnings a person consumes. If the government increases spending by $1,000, and if the recipients of the $1,000 decide to spend $800 to purchase goods (let’s say, a used car), then the marginal propensity to consume is 800/1,000, or .8, or 80%. The Multiplier and the Significance of the Multiplier This additional spending of $800 turns into additional income for the person who sold the product (the used car). If this person’s MPC is also 80%, then spending (for instance, on a television) increases by 80% of $800 or $640. This creates income for the person who sold the television. This person spends her/his MPC of the $640 on goods, and so forth. If the MPC is 80% for everyone in this economy, then the total amount of additional spending in the entire economy is: $1,000 (the initial government spending) + $800 (on the used car) + $640 (on the television) + … = $5,000. This mathematical sum...