Full Employment Rate / Unemployment Rate Definition:

Full employment includes structural and frictional unemployment. Structural unemployment is

permanent from deep economic shifts like automation eliminating manual jobs and foreign competition
lowering commodity prices causing e.g. mine and textile plant closings and unemployed mine and textile
workers. Frictional unemployment is short-term: people lose or leave jobs and are looking for new jobs
now. The U-3 unemployment rate is the official Federal Reserve unemployment rate, measuring total
unemployed as a percent of the civilian labor force. The Federal Reserve considers an unemployment
rate of 5.0% to 5.2% to be full employment representing structural and frictional unemployment.
Officially, the Federal Reserve would say the economy in 2018 is now greater than full employment. One
problem with U-3 is that is “does not” include discouraged workers who are not counted in the labor
force. Another problem with U-3 is that it does not include people who are working part-time (1 to 34
hours per week) because their hours were cut back or they cannot find full-time jobs even though they
would like to work full-time jobs. The “U-6” unemployment rate includes the effects of discouraged
workers and part-time workers. Its unemployment rate is double the U-3 rate.

U-3 Unemployment Graph: 5 Years 2008-2018: https://data.bls.gov/timeseries/LNS14000000

Alternative U-rates: https://www.bls.gov/news.release/empsit.t15.htm

U-6 Graph: https://data.bls.gov/pdq/SurveyOutputServlet

Consumer Price Index (CPI):

The objective of CPI is to determine the amount consumers need to spend on goods and services,
compared to previous years, to remain at the same level of satisfaction.

Gross Domestic Product (GDP):

GDP represents the total market value in dollars of all final goods and services produced inside a country
in a year. GDP’s formula is: Consumption + Investment + Government spending + net exports. GDP does
not include products produced in homes for home use, illegal transactions, underground activity, or
stocks and bonds. Sales of used good are not included in GDP when resold: they were in GDP the year
they were produced. Social costs of production like pollution and traffic jams are not included in GDP.
GDP is often called “nominal GDP” because this year’s GDP number with this year’s inflation cannot yet
be compared to GDP numbers of previous years. So, inflation needs to be removed by using a GDP
deflator to get Real GDP to compare this year’s GDP to the GDP’s of other years.