Wednesday, October 14, 2015

Unemployment rate and employment growth: Reasonable expectations

Stephen Williamson wrote a fantastic post, where he bounds reasonable numbers for employment growth and the unemployment rate, in the U.S., in coming months.


-200k jobs added per month, which many observers find normal, is more than we can reasonably expect.

-Recent trends and the current level of labor force participation suggest that employment can't grow faster than 0.5% for too long. 200k jobs per month imply a 1.7% growth rate, given the current level of unemployment.

-The unemployment rate can't probably get much lower than 4.6%.

-Going forward, monthly employment growth should be closer to 60k (population growth) than the "normal" 200k.

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