Back to Reality?

by Andrew C. McCarthy

I will soon have to be after a bit more vacation, but I’m not so sure about the country.

Browsing through the WSJ this morning I thought it might have become official that the “unemployment rate” had become the same sort of Obama-era joke as the number of jobs “saved or created” by “stimulating” the economy. The Journal reports that as the “unemployment rate” (now purportedly 6.7 percent) crawls toward 6.5 percent, the Fed’s target for easing off its bond-buying program, new chairwoman Janet Yellen has essentially abandoned the “unemployment rate” as a useful metric:

The central bank also rewrote its guidance about the likely path of short-term interest rates, putting less weight on the unemployment rate as a signpost for when rate increases will start. It said instead that the Fed would look at a broad range of economic indicators in deciding when to start raising short-term rates from near zero, where they have been since December 2008.

And what is the new guidance?

Ms. Yellen mentioned 10 different labor-market indicators she is watching, including the share of workers who have been unemployed for six months or more, the share of adults who are holding or seeking jobs, the portion of workers who hold part-time jobs but say they would rather have full-time occupations and the rate at which people are quitting jobs.

In other words, the Fed is going to be emphasizing real metrics of joblessness, such as the percentage of people in the working-age population who are working (now at its lowest point since the Carter malaise), not the voodoo “unemployment rate” statistic that manages, by Washington math, to drop even as employment drops. I wonder if the mainstream media will also make the switch as we get closer to the midterms . . .


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