Preparing spirits for another “postponement”!

First, the unemployment goalpost was at the 6.5% mark, then at 6%, falling to 5.5% before being revised to 5%.

With that, the “fatidic” date moved from mid-2014 to early 2015 to June 2015, to September 2015. But that will probably be changed again:

Next week, Federal Reserve officials publish new quarterly forecasts, and all eyes are going to be on where they set the job market’s Goldilocks rate.

That’s the estimated unemployment level officials figure is neither too high nor so low that it starts to drive wages and prices higher. To quote Goldilocks, it’s “just right.”

Fed officials in March estimated this “natural rate” of unemployment at 5 percent to 5.2 percent. Unemployment stood at 5.5 percent in May. A new paper by Fed board staff shakes up this view by suggesting the number could be as low as 4.3 percent.

Moving Goalpost

It´s long past the time the Fed changed its “tune-up”!

2 thoughts on “Preparing spirits for another “postponement”!

  1. There’s something disturbing about the entire discussion of where the demarcation of acceptable unemployment is when the inverse of that would be not having enough. It’s reasoning from the pre-globalization age that I suspect is causes unnecessary harm given that there are still many places on the globe that can be developed and there are plenty of trade relationships to be developed.

  2. The Phillips Curve has been dead a while. I do not know why the Fed keeps obsessing on unemployment. The US had very low unemployment in the late 1990s with low inflation, and also in the 1950s.

    The US has also had high unemployment and high inflation at various spans.

    A goring economy tends to boost productivity.

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