The Federal Reserve predicts it will keep stimulative policies in place until the unemployment rate falls to 6.5%. But just how many jobs will it take to get there?
As of November, the unemployment rate was 7.7%. In order to drop to 6.5% immediately, it would require 1.9 million jobs to be created right now. Just like that. Bam!
Obviously, that’s impossible. The economy is chugging along slowly, and with job growth averaging around 150,000 each month, that’s an entire year’s worth of hiring.
But the Fed expects it will take longer than one year to get to its goal. That’s because, once you factor in population growth, the economy will need far more jobs to be added than the current pace.
To get there in a year, 3.2 million jobs have to be created. That’s roughly 270,000 jobs each month.
Extend that out to the end of 2014, and the economy would need 5 million jobs, or 200,000 jobs a month, according to David Rosenberg, chief economist and strategist for Gluskin Sheff & Associates.
But hiring at that rate is unlikely. That’s exactly why the Federal Reserve predicts it will take until some time in 2015 to bring the unemployment rate down to 6.5%.
Rosenberg thinks even that is optimistic though. If job growth continues at its current pace of 150,000 jobs a month, it could take until 2018, he said.
Choosen excerpts by Job Market Monitor from
The Federal Reserve announced Wednesday that it will take unprecedented steps to bolster the economy, saying it will continue to stimulate growth until the unemployment rate falls to 6.5 percent or the inflation rate reaches 2.5 percent. The Fed said it did not expect unemployment to reach that benchmark until 2015. It was a historic … Continue reading »
Dallas Fed President Richard Fisher, a top Federal Reserve official, said on Tuesday that his main concern now was unemployment, not inflation. He said another option the Fed might consider to signal its aims to markets was a target for unemployment, although this would be difficult because monetary policy alone was not responsible for creating jobs. … Continue reading »
Federal Reserve Bank of Atlanta President Dennis Lockhart said forceful central bank policies will remain needed to spur job growth even if Congress averts sudden tax increases and spending cuts at the end of the year. “I expect that continued aggressive use of balance sheet monetary tools will be appropriate and justified by economic conditions … Continue reading »
Federal Reserve Vice Chairman Janet Yellen backed a proposal to link the Fed’s zero interest-rate policy to progress toward meeting its goals for inflation and employment rather than to a calendar date. “The Committee might eliminate the calendar date entirely and replace it with guidance on the economic conditions that would need to prevail before … Continue reading »
Each month, The Hamilton Project examines the “jobs gap,” which is the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while absorbing the people who enter the labor force each month. As of September, our nation faces a gap of 11.1 million jobs, but the … Continue reading »
We face a 9 million jobs gap between the number of jobs we have and the number we need, and this doesn’t even address the low quality of the jobs being created. The chart below, taken from an Economic Policy Institute blog post, illustrates the gap. As Heidi Shierholz, the author of the post, explains: The … Continue reading »
The labor market has added nearly 5 million jobs since the post-Great Recession low in Feb. 2010. Because of the historic job loss of the Great Recession, however, the labor market still has 3.8 million fewer jobs than it had before the recession began in Dec. 2007. Furthermore, because the potential labor force grows as … Continue reading »
” The recovery is real, but it’s still really far from the recovery we need” writes Matthew O’Brien in The Scariest Jobs Chart, Private Sector Edition. (Choosen excerpts by JMM to follow) That’s been the consistent message of the past three years, with consistent job growth that hasn’t been near enough to end our jobs crisis much … Continue reading »
Fiscal policy, at both the federal and state and local levels: headwinds for unemployment reduction says Bernanke
The accommodative monetary policies I have reviewed today, both traditional and nontraditional, have provided important support to the economic recovery while helping to maintain price stability… Notwithstanding these positive signs, the economic situation is obviously far from satisfactory… Further, the rate of improvement in the labor market has been painfully slow. I have noted on …Continue reading »