Bloomberg details:
The new “normal” unemployment rate may now be 6.7 percent, rising as much as 1.7 percentage points from 5 percent before the recession began, according to researchers at the Federal Reserve Bank of San Francisco.That's one explanation (and I can't disagree with the above facts), but perhaps the "natural" rate of unemployment was never as low as it appeared from the late 80's through late 00's either.
High rates of long-term joblessness, extended unemployment benefits and a mismatch of skills between workers and available jobs may be impeding a return to the previous level, said John Williams, the bank’s research director, and research associate Justin Weidner in a paper released today.
Source: BLS
...or maybe the natural rate is not as high as it appears now.
ReplyDeleteFrankly, I find the Fed piece a self-serving excuse to avoid the difficult process that is one of the Fed's two mandates: Achieving full employment.
OTOH--It's doing wonders for wealthy investors.