What Is A Bull Market? Here’s What You Should Know

Another feature that plays a role in this level of economic confidence is the fact that unemployment is typically found to be at some of its lowest rates during these types of market conditions. Unemployment, according to the Economic Policy Institute, is a good indicator of the economic direction that a nation is experiencing at any given point in time. When more people are unemployed than the typical average, government spending must be repurposed to focus on austerity policies and other measures to fight inflation and a sharp uptick in the number of individuals requiring assistance (either for a short or extended period of time).

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Similarly, when unemployment rates rise people in local communities stop spending money as freely as they might otherwise. When a person loses their job or leaves it, they tighten their budget in order to make ends meet while they search for a new position. This creates a knock-on effect that will hamper the economic growth of local businesses, especially if many people are facing these tough decisions at the same time.

Conversely, in bull markets, the unemployment rate is typically lower than average or hovers at the low end of a standard range. As such, consumers and investors feel secure in their financial circumstances and freely spend money in their local marketplace and in their investment portfolios alike.

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