Posted on 04/23/2015 7:16:02 AM PDT by Citizen Zed
As the Federal Reserve begins to consider raising interest rates, potentially sometime later this year, one critical question is how close the U.S. economy, with a 5.5% unemployment rate as of March, is to reaching full employment (NAIRU), the natural long-run rate of unemployment given constant levels of frictional unemployment. In December, Federal Reserve officials assessed in their Survey of Economic Projections that the economy’s long-run unemployment rate was somewhere between 5.2% and 5.5%, while in updated projections released in March, Fed officials lowered their estimate to a range between 5 and 5.2%. One important distinction to make is not just finding the natural rate of unemployment but also taking into consideration other important labor market factors like low labor force participation and depressed wage growth. Echoing these considerations, former Federal Reserve Chairman Ben Bernanke recently noted, “The unemployment rate used to be the only number you had to look at. Now of course there are many dimensions.” As the nationwide unemployment rate moves closer to the natural rate, an important question that has received much less attention is which states have already reached full employment?
(Excerpt) Read more at forbes.com ...
Since the fictional unemployment number is cooked-up each month somewhere in the bowels of the White Hut, Obama pretty much has the Fed by the shorthairs from now on.
The Feds are going to tighten. If you believe this I’ve got some swampland in Fla to sell you. :-)
Another question. And I don’t know the answer...
Are people with two jobs counted as two people gaining jobs? I would imagine they are with this bunch. Anything to glorify the divinity of the Obama.
Given how fudged the unemployment numbers are, I suspect we can eventually reach negative unemployment percentages. The New Normal.
To answer the question in the headline: What is none, thanks to not accounting for the workforce participation rate? I’ll take stupid econ questions for 400 Alex.
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