Posted on 10/03/2014 10:56:12 PM PDT by Citizen Zed
For years the Fed has used the jobless rate and inflation as the key metrics for guiding Fed policy. But with the unemployment rate falling faster than Fed forecasts year after year – partly due to slower-than-expected labor force growth – other criteria have entered the picture.
Erstwhile Fed Chairman Alan Greenspan was well-known for his deliberately opaque utterances, and is reported to have once said, “I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant.” His successor, Ben Bernanke, committed to transparency, appointed his eventual successor, Janet Yellen, to head up the Fed’s communications committee. The growing confusion about the Fed’s rate hike criteria under Ms. Yellen’s watch is ironic in that context.
A year and a half ago, Ms. Yellen introduced a labor market “dashboard” incorporating four indicators in addition to the jobless rate. Three more indicators were subsequently added to the dashboard. Then, in her Jackson Hole speech in August, she mentioned a 19-component index developed by Fed economists, as well as an even broader 24-component Labor Market Conditions Index (LMCI) developed by the Kansas City Fed.
(Excerpt) Read more at businesscycle.com ...
Should be a graph also showing the rate I. Which the Labor Department has removed people from the work force. Then add the graph showing zero hourly wage growth. Finally add the u-6 data.
So the U-6 Number is strong double digits, the employment rate is 62%, hourly wages are stagnant, and the administration wants to legalize millions of additional minimum wage workers who have entered the US illegally.
Because even the experts don’t know.
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