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Caterpillar Inc. Message Board

  • base1hits base1hits Dec 12, 2012 5:20 PM Flag

    6.5% Unemployment Goal

    Interesting that the fed today set a new target of 6.5% unemployment. This apparently is now the goal to reach for the economy to have fully recovered. It used to be 3.5%. Goes to show what growing entitlements, SNAP, disability, unemployment payments, etc, have done to American drive to actually work for a living. Over 60% of Americans recieve a monthly payment from the feds, up from 17% in the '70's. Europe here we come.

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    • As I read it, 6.5% unemployment is just the point at which they will end QE to Infinity. The classic definition of full employment will still be 3.5 - 4%.

      Sentiment: Hold

      • 2 Replies to richoncat
      • Actually the traditional full employment is 5% unemployment, with it going under 5% in peak times!

      • Beg to differ. While 6.5% is where the fed will begin changing course, a rate between 5.2% and 6.5% is to be considered full employment. See below from the Washington Times today:

        "Fed Chairman Ben S. Bernanke said in a news conference that the 6.5 percent jobless rate is actually a threshold at which the Fed will consider raising interest rates, and is not the central bank’s formal “target” for reducing unemployment. He said the Fed’s real target — the so-called “full employment” rate where joblessness lands in a fully recovered economy — is actually between 5.2 percent and 6 percent, but the Fed wants to stop easing before that level is achieved so as not to risk an uptick in inflation.

        “The 6.5 percent should not be interpreted as the committee’s long-term objective for unemployment,” Mr. Bernanke said, while disclosing that the real goal is the somewhat lower range of 5 percent to 6 percent."

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