Final answer:
The decrease in the unemployment rate usually indicates that the U.S. economy is in an expansion phase, as unemployment rates tend to fall during economic growth periods and rise during recessions.
Step-by-step explanation:
The change in the unemployment rate over the past year suggests information about the current phase of the economy. If the unemployment rate decreased significantly, it could indicate that the U.S. economy was in an expansion. Conversely, an increase could point to a recession. A downward or upward movement in the rate is part of the business cycle, consisting of periods of contraction (recession) and expansion (recovery or growth). The pattern of these cycles can be observed since 1900, where a recession is from peak to trough, and an expansion is from trough to peak.
According to the business cycle theory, if we are observing a drop in the unemployment rate, this would generally reflect a period of expansion following a trough. The longest expansions since 1960 signify periods where the economy was growing and likely experiencing a decrease in unemployment rates up until reaching a peak, after which a recession might typically begin. Notably, the most recent severe recessions include the 2007-2009 Great Recession and the short-lived but sharp downturn caused by the COVID-19 pandemic in 2020.