If 21% of unemployed find jobs and 0.9% of the employed lose their jobs, the natural rate of unemployment will be 3.5%.
Generally, the U.S. unemployment rate is calculated by dividing the number of unemployed by the workforce (employed or unemployed) and multiplying that number by 100.
To calculate the natural rate of unemployment, first, add the number of frictional unemployed (FU) to the number of structurally unemployed (SU) and divide this number by the total labor force.
Many people consider the 4% to 5% natural rate of unemployment to be full employment and are not particularly concerned. The natural rate of unemployment represents the lowest unemployment rate at which inflation is stable or the unemployment rate that exists when inflation is not accelerating.
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