Annotation
Speech (cont.)
8. Never mind that wage and salary growth has
The labor market has continued to strengthen. Payroll growth 8 has averaged 175,000 over the past three months, more than sufficient to absorb new entrants into the labor market. Although earlier in the recovery, it appeared that the U-3 unemployment rate was running ahead of broader indicators of slack, more recently, it has been encouraging to see other margins of slack being drawn down. The labor force participation rate has held stable, against what many believe to be a downward trend based on demographics 9 , and the employment-to-population ratio has reached a new post- recession high. Moreover, the share of employees who work part time for economic reasons 10 has recently moved down close to its pre-crisis level, after a long period of remaining at elevated levels. The most commonly used U-3 measure 11 of the unemployment rate moved down to 4.4 percent in April. This happens to be the cyclical low reached in 2006-07, although unemployment was at or below this level much of the time from the middle of 1998 to the middle of 2001. Relative to recent decades, the unemployment rate is now quite low. In fact, some have voiced concerns that the economy has proven unable to sustain its expansion when the unemployment rate has fallen below these levels. 12 With that in mind, it is worth asking whether we should be worried that history will inevitably repeat itself. 13 The truth is, we cannot know for sure. 14 Although rising inflation often heralded the death knell of economic expansions in earlier decades, inflation expectations have been well anchored and rising inflation has presented less of a risk in the most recent business cycles. From 1998 to 2001, for instance, core personal consumption 15 expenditures (PCE) inflation never exceeded 2 percent on a four-quarter basis. Core PCE inflation did reach as high as 2.4 percent in the period from 2006 to 2007, but, at the time, this higher inflation was viewed as reflecting the pass-through of a significant run-up in energy and non-energy import prices. 16 Today, there is little indication of an outbreak of inflation
been stagnant since the Great Recession.
9. Don't blame us old folks, we can't afford to retire.
10. As opposed to working for kicks and giggles.
11. Most commonly used because it's inaccurate
and hilariously optimistic.
12. Yeah, there are only 6.9
million Americans looking for a job.
13. The history of mistakes the Fed made has sure repeated itself plenty of times.
14. Weasel phrases alert!
15. What the heck is “core
personal consumption”? Is that what you've got left after you've been peeled and eaten alive? happening at the moment, making the whole preceding paragraph as meaningless as it sounds.
16. Neither of which is
38 | June 2017
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