Yellen Channeling Slick as Surrealistic Economy Shows ’67 Claims
By Victoria Stilwell and Jeff Kearns Aug 15, 2014 12:00 AM ET
The U.S. labor market is looking a little surreal these days.
Take the number of workers filing claims for unemployment benefits. As a share of the population, it’s the lowest since at least 1967 -- the year Grace Slick and her Jefferson Airplane bandmates dropped drug references in the San Francisco-spawned album Surrealistic Pillow, and 37 years before Janet Yellen became president of the region’s Federal Reserve bank. Yet the ranks of the long-term unemployed remain larger than at any time before the 2007-2009 recession.
That leads to two starkly different views of the U.S. economy. In one, job growth is increasing along with inflation, leaving Yellen, now at the helm of the U.S. central bank, behind the curve with recession-era monetary policy still in place. The other view portrays a fragile recovery that owes its modest gains to the Fed’s near-zero interest rates. The job-market contrasts are dividing economy-watchers on when the Fed should start raising rates, which it hasn’t done since 2006.
“The difference of opinion is whether we’re in a state that’s about as good as it’s going to get or whether we’re in a very poor state, but with good policies and a bit of luck we’ll be able to do a lot better,” said Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel prize in economics. “Whether you can or not, of course, depends on circumstances and changes in the structure of the economy.”
Significant Slack
Even with employment rebounding, Yellen has cautioned it still may be too soon to start withdrawing accommodation. She will give the keynote speech to the Kansas City Fed’s symposium in Jackson Hole, Wyoming, on Aug. 22. The three-day gathering of central bankers begins a day earlier with the topic of “Re-evaluating Labor Market Dynamics.”
more...
http://www.bloomberg.com/news/2014-08-15/yellen-channeling-slick-as-surrealistic-economy-shows-67-claims.html