when economic output falls the business cycle is low and cyclical unemployment will rise conversely when business cycles are at their peak cyclical unemployment will tend to be low because there is a high demand for labor 
example of cyclical unemploymentduring the financial crisis in 2008 the housing bubble burst and the great recession began as more and more borrowers failed to meet the debt obligations associated with their homes and qualifications for new loans become more stringent the demand for new construction declined with the overall number of unemployed climbing and more borrowers unable to maintain payments on their homes additional properties were subject to foreclosure driving demand for construction even lower as a result approximately 1 5 million workers in the construction field became unemployed 1 this rise in unemployment was cyclical unemployment as the economy recovered over the following years the financial sector returned to profitability and began to make more loans people began buying homes again or remodeling existing ones causing the prices of real estate to climb once again construction jobs returned to meet this renewed demand in the housing sector and cyclical unemployment declined multiple types of unemployment often exist at the same time cyclical vs other types of unemploymentcyclical unemployment is one of the main classes of unemployment as recognized by economists other types include structural seasonal frictional and institutional unemployment rather than being caused by the ebbs and flows of the business cycle structural unemployment is caused by fundamental shifts in the makeup of the economy for example jobs lost in the buggy whip sector once automobiles came to dominate it is a mismatch between the supply and demand for certain skills in the labor market frictional unemployment is short term joblessness caused by the actual process of leaving one job to start another including the time needed to look for a new job it naturally occurs even in a growing stable economy and is actually beneficial as it indicates that workers are seeking better positions institutional unemployment consists of the component of unemployment attributable to institutional arrangements such as high minimum wage laws discriminatory hiring practices or high rates of unionization it results from long term or permanent institutional factors and incentives in the economy seasonal unemployment occurs as demands shift from one season to the next this category can include any workers whose jobs are dependent on a particular season official unemployment statistics will often be adjusted or smoothed to account for seasonal unemployment this is known as a seasonal adjustment for example teachers may be considered seasonal based on the fact that most schools in the u s cease or limit operations during the summer similarly construction workers living in areas where construction during the cold months is challenging may lose work in winter certain retail stores hire seasonal workers during the winter holiday season to better manage increased sales then release those workers after the holidays when demand lessens special considerationsin most cases several types of unemployment exist at the same time with the exception of cyclical unemployment the other classes can occur even at the peak ranges of business cycles when the economy is said to be at or near full employment 