Job Market Monitor
Fed
US Monetary Policy / On unemployment vs the fear of inflation
The Fed’s reliance on the unemployment rate for determining when to pull back on bond purchases may prove troublesome. That’s because statistics on the supply of labor are notoriously tricky to evaluate, particularly when it comes to gaging their relationship to inflation Continue reading
The FED / A highly accommodative stance of monetary policy will remain appropriate for a considerable time (video)
The Committee also reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored Continue reading
Monetary Policy / Why it matters whether the fed targets inflation or unemployment
Analysis suggests that in the United States today, it might be appropriate for interest rates to remain low until unemployment crosses a “threshold” as low as 5.5 percent Continue reading
Bernanke / There’s a long way to go before raises rates
“In particular, even after unemployment drops below 6.5 percent, and so long as inflation remains well behaved,” he continued, “the (Fed Open Markets) Committee can be patient in seeking assurance that the labor market is sufficiently strong before considering any increase in its target for the federal funds rate Continue reading
US Monetary Policy / Fed’s Bullard sees substantial progress in labor markets
There’s been “substantial progress” in the U.S. labor market, St. Louis Fed President James Bullard told CNBC on Monday. But inflation is low, he added—saying, “What’s the hurry” to taper the Federal Reserve’s massive bond-buying program. “The unemployment rate is down almost a full point from when we start this program in September 2012. We’ve … Continue reading
US / Sen. Paul threatens to hold Yellen nomination
Sen. Rand Paul is threatening to put a hold on the nomination of Janet Yellen to chair the Federal Reserve, a source close to the Kentucky Republican said Friday Continue reading
US Labor Market / IMF’s chief endorses Fed the Federal Reserve’s decision
International Monetary Fund chief Christine Lagarde on Thursday praised the Federal Reserve’s decision this week not to tap the brakes on its bond-buying program to stimulate the U.S. economy, saying it was still too soon to start the widely expected “tapering” operation on the Fed program. “The IMF has always said that it should be … Continue reading
US / Fed Has Failed to Lower Unemployment
Fed Chairman Ben Bernanke continues to believe that more aggregate demand is all that is needed to put back to work the unemployed, but about 1.65 million more people would have jobs if the unemployment rate dropped to the Fed’s target Continue reading
US / When will the unemployment rate fall to 6.5% (the Fed’s threshold)
When will the unemployment rate fall to 6.5% (the Fed’s threshold, but not trigger, for raising the Fed’s funds rate)? If the participation rate stays steady, the unemployment rate will fall to 6.5% in December 2014 if the economy adds around 185,000 jobs per month. This is consistent with the Fed not raising rates until 2015 … Continue reading
Fed / Need to let inflation rise to bring down unemployment faster
The Federal Reserve may need to let inflation run a little higher than its 2-percent target in order to bring down unemployment faster, a top Fed official said on Saturday. Strictly capping inflation at 2 percent while allowing high unemployment to linger would be an “inappropriate” approach to monetary policy, Minneapolis Federal Reserve Bank President … Continue reading
US / The unemployment rate is understating the “true” amount of under-employment
The Fed/IMF/GS economists argue that the unemployment rate is now substantially understating the “true” amount of under-employment in the economy because the labour force participation rate has fallen as a direct consequence of the depth and longevity of the recession. They show that, while this effect does not apply during a normal recession, workers have … Continue reading
US / Students “deserve the same break that big banks get” says Elizabeth Warren
“The U.S. government invests in big banks by giving them a great deal on their interest rates,” freshman Sen. Elizabeth Warren said in an interview with Salon on Wednesday afternoon (the transcript of which is below). “We should make at least the same investment in our students.” Warren was discussing the first bill she has introduced … Continue reading
The Federal Reserve Act calls for ‘maximum employment’, not ‘minimum unemployment’
the Federal Reserve Act calls for ‘maximum employment’, not ‘minimum unemployment’. This distinction did not matter much in the past, but it is becoming increasingly important. The ‘participation gap’ remains as big a drag on growth as ‘unemployment’ and we, like Goldman, would expect the Fed to ‘change’ its target for their outcome-based guidance (to … Continue reading
When Will The Unemployment Rate end the Fed’s Easing Measures ?
The Federal Reserve’s is expected to extend its easing measures until the job market improves “substantially”, the stated goal is a decline of the unemployment rate to 6.5%. One can use the unemployment rate model to provide an estimate of the future unemployment rate (UER). This model suggests that the unemployment rate will decline to … Continue reading
US Unemployment Rate / Why Not Target a 3% ?
Sad to say, the Fed considers 5.2 percent to 6 percent the economy’s long-run normal rate of unemployment. Achieving that rate would be a vast improvement over today. Still, once upon a time and not all that long ago, America’s elites strived for full employment, a catchphrase now relegated to economic history. Full employment was … Continue reading
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