It is widely believed that a low rate of unemployment and high rate of inflation are key signs of a healthy economy. While this may be the case, these characteristics are also the ones that are most likely to be observed at the very top of an economic cycle. Unemployment and inflation are key metrics monitored by the Federal Reserve (Fed) and very positive readings can limit its room for manoeuvre at critical points in the economic cycle. This month, we will look at the current rates of inflation and unemployment in the US economy, a key driver of the world economy, and examine what these metrics tell us regarding the chance of an upcoming recession.
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