From Real Time Economics:
It may not take much more to get to the labor market’s promised land, an improvement that could alter the debate over when the Federal Reserve starts raising interest rates.
Employers have added an average of about 220,000 jobs per month for the past year.
According to the Federal Reserve Bank of Atlanta’s job calculator,
if the economy sustains a pace slightly better than that, of around
227,000 jobs per month, the unemployment rate could fall to 5.5% within
five months.
That rate is the top of the 5.2% to 5.5% range Fed officials view as
the nation’s long-run unemployment rate. The government reported Friday
that joblessness fell to 5.8% in October.
The long-run rate of unemployment is a key concept for Federal
Reserve officials. Policymakers and many private sector forecasters
think if joblessness falls below that range, inflation pressures will
begin to heat up as workers find more power to ask for wage increases.
Of course, there’s considerable uncertainty about the exact level of
this rate....MORE
