Yellen Jobs Dashboard Shows Rate Rise Far on Horizon: Economy
By Rich Miller and Michelle Jamrisko Apr 2, 2014 9:00 AM ET
More than two-thirds of the gauges on Janet Yellen’s labor-market dashboard are still showing worse readings than before the recession, reinforcing her belief that the economy will need “extraordinary support” from the Federal Reserve for “some time to come.”
Only two of the nine indicators flagged by the new Fed chair -- payroll growth and layoffs -- are back to where they were in the four years leading up to the last economic downturn. The seven others, including joblessness, underemployment and labor-force participation, have yet to return to their 2004-to-2007 averages.
“The unemployment rate and a lot of these other series aren’t where the Fed thinks they need to be,” said Joe LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York and the top forecaster of unemployment over the past two years, according to data compiled by Bloomberg. Policy makers are “going to need a general sense that the labor market has entered a more sustainable path before they start to consider the possibility of raising interest rates.”
Yellen is using what she calls her “dashboard” of jobs data to justify the Fed’s easy-money policies and to argue that there’s still considerable slack in the labor market almost five years after the recession’s end. While the job market has strengthened considerably from the depths of the downturn, it is “not back to normal health,” the Fed chief said in a March 31 speech in Chicago.
Main Laggards
The biggest laggards have been long-term unemployment and participation. More than a third of the jobless have been out of work for more than 26 weeks, while the share of the working-age population in the labor force is at an almost 36-year low.
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http://www.bloomberg.com/news/2014-04-02/yellen-jobs-dashboard-shows-rate-rise-far-on-horizon-economy.html