Some excerpts from a research piece by Goldman Sachs chief economist Jan Hatzius: The Employment Gap Is Much Bigger than the FOMC's Current Estimate of the Unemployment GapCalculated Risk
Goldman's Hatzius: "The Employment Gap Is Much Bigger than the FOMC's Current Estimate"
Bill McBride
3 comments:
Does anyone understand how Hatzius calculated the 500,000 figure?
QUOTE
The Fed's most "official" view of excess labor market slack is the gap between the unemployment rate (currently 5.4%) and the midpoint of the FOMC's central tendency range for the "longer-term" rate (currently 5.1%), which is usually taken to be an estimate of the structural unemployment rate. Taken at face value, this implies that the US economy can only create an additional 500,000 jobs before the labor market starts to overheat. ... If this is the right perspective, it would be entirely sensible, and perhaps urgent, to start normalizing monetary policy soon.
ENDQUOTE
What I find amusing/disturbing about this output gap discussion is that people will accept that 8.5 million people without jobs *or any possibility of getting one* is perfectly normal and acceptable.
In any other walk of life sacrificing 8.5 million people would be totally unacceptable.
My sentiments exactly on reading that, Neil. WTF.
It's even uneconomic in addition to be being immoral.
How can one claim that capitalism is "efficient" when it so lavishly wastes the most valuable resource it has and undercuts itself by crimping demand for its products and services?
Bonkers.
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