Monday, May 8, 2017
The Fed's Labor Market Index aims to give a bigger picture of the economy
The Fed's Labor Market Index aims to give a bigger picture of the economy
The Federal Reserve labor market index integrates 19 different indicators on employment. It is designed to get around the problem of people who haven't looked for a job in the past month not being included in the unemployment rate. It also gets at other issues such as part-time workers not being differentiated in the official unemployment rate. On Friday unemployment numbers were released and the 4.4% rate was the lowest in a decade.
1. Should we be happy with the 4.4% unemployment rate that was released Friday or would the labor market index likely give us a more complete story of the employment picture?
2. Who gets credit for the 4.4% unemployment rate? The Federal Reserve? The Obama administration? The business cycle? Trump's first 100 days?
3. Does it make sense for the Federal Reserve to continue raising interest rates given the low unemployment rate and extended period of low interest rates this decade?
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The low unemployment rate is a combination of many factors, as is any change with the economy. Trump's de-regulation thus far has helped businesses grow, Obama's government spending reduced unemployment but did raise inflation, and a business cycle out of the recent recession also helped. Raising interest rates also is perfect timing thus far this removed from the most recent recession.
ReplyDeleteI agree with Tomislav, there are so many factors that affect unemployment, and it by itself isn't a complete view of the economy as a whole.
ReplyDeleteI think that 4.4 is not too bad for unemployment but it's still not good. There's still a lot of people with no jobs.
ReplyDeleteI think the 4.4% unemployment rate is low but it could be better but I think that it is good for but it does need some help and I think that in the future the unemployment rate could rise.
ReplyDeleteAlthough unemployment rates mainly represent the economy, there are other factors that can hurt the economy or even grow the economy.
ReplyDelete