Cyclical Unemployment

Cyclical unemployment occurs when people lose their jobs due to economic downturns, such as recessions. During these periods, businesses experience reduced demand for goods and services, leading them to cut back on production and lay off workers. As a result, more people are out of work, and it becomes harder to find new jobs. This type of unemployment is directly linked to the economic cycle; when the economy improves, businesses hire again, reducing cyclical unemployment. Essentially, it reflects the relationship between job availability and the overall health of the economy.