Since my appearance before this Committee in February, the economy has made further progress toward the Federal Reserve’s objective of maximum employment, while inflation has continued to run below the level that the Federal Open Market Committee (FOMC) judges to be most consistent over the longer run with the Federal Reserve’s statutory mandate to promote maximum employment and price stability.
In the labor market, the unemployment rate now stands at 5.3 percent, slightly below its level at the end of last year and down more than 4-1/2 percentage points from its 10 percent peak in late 2009. Meanwhile, monthly gains in nonfarm payroll employment averaged about 210,000 over the first half of this year, somewhat less than the robust 260,000 average seen in 2014 but still sufficient to bring the total increase in employment since its trough to more than 12 million jobs. Other measures of job market health are also trending in the right direction, with noticeable declines over the past year in the number of people suffering long-term unemployment and in the numbers working part time who would prefer full-time employment. However, these measures–as well as the unemployment rate–continue to indicate that there is still some slack in labor markets. For example, too many people are not searching for a job but would likely do so if the labor market was stronger. And, although there are tentative signs that wage growth has picked up, it continues to be relatively subdued, consistent with other indications of slack. Thus, while labor market conditions have improved substantially, they are, in the FOMC’s judgment, not yet consistent with maximum employment.
Chosen excerpts by Job Market Monitor. Read the whole story at FRB: Testimony–Yellen, Semiannual Monetary Policy Report to the Congress–July 15, 2015.