In economic theory, Okun's law describes the relationship between quarterly changes in GDP growth and quarterly changes in the unemployment rate. Generally speaking, reduction in the unemployment rate trails GDP growth by about 2%. Therefore, with the current economy displaying anemic growth of 2%, the unemployment rate will remain at 9% for the near term.
After digesting this information, the stock markets opened modestly lower.
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| Source: TaintedAlpha.com Following a GDP growth reading of 1.3% for the second quarter, growth of 2.5% would have been a large jump. |
