Following an extensive review that included numerous public events across the country, the Federal Open Market Committee (FOMC) on Thursday announced the unanimous approval of updates to its Statement on Longer-Run Goals and Monetary Policy Strategy, which articulates its approach to monetary policy and serves as the foundation for its policy actions. The updates reflect … Continue reading
Though the U.S. economy is apparently at or close to full employment, wages have barely budged above the level that would be justified by productivity increases and inflation alone. There is little or no inflationary pressure. The so-called Phillips curve that once mapped the inverse relationship between unemployment and inflation is not serving as a … Continue reading
Employment, Wages, and Prices Employment levels remained stable or continued to grow in most Districts and across a variety of sectors. Contacts in several Districts noted strong labor demand and challenges filling a variety of skilled positions. Firms in the Philadelphia District reported positive employment trends in a broad range of sectors, with the majority … Continue reading
Can growth alone tackle unemployment? Evidence is summarized in Figure 2, which shows the growth-jobs nexus using two alternate measure of the state of labor markets, the unemployment rate and the growth rate of employment. The left panel of Figure 2 shows that, among advanced economies on average, unemployment falls by a third of a … Continue reading
Last week’s employment numbers showed employers adding 214,000 jobs in October. Revisions for September and August added 31,000 more jobs than originally estimated. Interestingly, what we once thought was a weak jobs report for August now shows we added 203,000 jobs, which means that we have had nine months of job growth above 200,000 for … Continue reading
With the U.S. economy showing signs of life, the Federal Reserve moved Wednesday to end billions of dollars in monthly bond purchases aimed at boosting growth. The central bank had initiated the policy, known as “quantitative easing,” in 2008 to keep interest rates low and boost economic activity following the financial crisis. Six years later, … Continue reading
Possible channels linking monetary policy and inequality Proponents of this view focus on two channels through which monetary policy affects inequality. Heterogeneity in income sources While most households rely predominantly on labour incomes, for others financial income, business income, or transfers may be more important. If expansionary policy raises profits by more than wages, wealth … Continue reading
No doubt there are some political risks here. But was she supposed to remain silent on inequality for her entire tenure? For the Chair of the nation’s most powerful economic institution to ignore one of most powerful economic trends of our time would be close to a dereliction of duty. Arguments are raging over the … Continue reading
The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make … Continue reading
A paper written by two staff members of the Federal Reserve Bank of Atlanta tried to quantify what all the Fed’s new money creation and related measures have accomplished. They conclude that unemployment today would be 0.13% higher without the radical measures and 1.0% higher if nothing at all had been done. Chosen excerpts by … Continue reading
The January 2012 statement of long-run monetary policy strategy clearly expresses the FOMC’s policy intentions: It states that the FOMC’s explicit inflation objective is 2 percent for the price index for personal consumption expenditures (PCE) in the long run and that maximum employment is associated with a sustainable unemployment rate that properly reflects structural developments … Continue reading
t’s too soon for the Federal Reserve to begin thinking about raising interest rates despite a strengthening U.S. economy, Dallas Fed President Richard Fisher said on Sunday. Mr. Fisher, a self-described inflation hawk who opposed the central bank’s latest round of bond purchases, said the weakness in first quarter U.S. economic growth, which nearly stalled … Continue reading
In the years following 2009, long-term unemployment has been very elevated while inflation has fallen only moderately, raising the question of whether the long-term unemployed exert less downward pressure on prices than the short-term unemployed, perhaps because such potential workers are disconnected from the labor market. However, empirical evidence is mixed. This analysis demonstrates that … Continue reading
Sweden’s Left Party wants the Riksbank to broaden its target to include employment when it sets interest rates. The party, which supports the opposition Social Democrats leading in most polls ahead of September elections, also advocated for looser budget rules to cut joblessness in the largest Nordic economy. The jobs objective should complement the bank’s … Continue reading
Janet Yellen, the Federal Reserve chairwoman, devoted more than an hour last week talking by telephone with three Chicago area residents struggling to find jobs. On Monday, she made their stories the centerpiece of the first public speech in her new job, delivering a strong statement about her concern over unemployment, her conviction that the … Continue reading