How Long Will it Take to Get to 6.5 Percent Unemployment? | Brookings Institution

Job Market Monitor : Last week, the FED said  that 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. The Brooking Institute takes a look at it.

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The chart below shows how long it will take to reach an unemployment rate of 6.5 percent based on different assumptions of monthly job growth.

Predicting when the economy will get back to 6.5 percent unemployment depends on many factors. For example, if monthly job growth averaged 150,000, the unemployment rate would not reach 6.5 percent until 2018. Employment growth—as measured in the household survey—has averaged about 220,000 jobs per month over the past year. Continuing at this pace, it would take about two and a half years to get back to 6.5 percent.

While the Federal Reserve has set its benchmark at 6.5 percent, that is significantly higher than the unemployment rate in the year before the start of the Great Recession, which never exceeded 5 percent. Returning to pre-recession normal will necessarily take even longer.

The Hamilton Project’s “jobs gap” calculator allows you to explore how long it will take to return to the pre-recession employment rates, rather than unemployment rates, at various levels of job growth each month. The jobs gap calculator can be found here, and the state-by-state breakdown of the jobs gap, updated each month.

Choosen excerpts by Job Market Monitor from

via How Long Will it Take to Get to 6.5 Percent Unemployment? | Brookings Institution.

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