Inflation and Unemployment
Chart of the Week for May 29, 2015 - June 4, 2015
Two of the major economic indicators the Federal Open Market Committee ("FOMC") of the U.S. Federal Reserve Board ("Fed") uses to guide their monetary policy activities are the unemployment rate and the inflation rate. Those indicators help the FOMC measure progress toward its "dual mandate" of full employment and stable prices.
The FOMC's preferred measure of inflation is core Personal Consumption Expenditures ("PCE"), which is reported monthly by the Bureau of Economic Analysis. The current FOMC mandate for inflation is 2%, which was established in 2012.
Monthly unemployment data is gathered and published by the Bureau of Labor Statistics. The FOMC has not published a set measure for unemployment, as employment changes over time and they use projections that can vary from quarter to quarter. Many economists are currently defining full employment as having been achieved when the unemployment rate drops to 5.2%, which many anticipate will be achieved by early 2016.
Investors monitor these two indicators closely, since the Fed policy statements and actions can have significant impact on markets. As noted in chart above, unemployment has been on a steady decline over the three year period shown. The most recent reading, March 2015, was 5.5%. Inflation has generally declined over the three year period shown from 2.04% in March 2012 to 1.35% in March 2015. Historically, economists have been concerned that higher employment levels will lead to growth in inflation as more money is available to be spent on goods and services. However, in this three year period, slow wage growth overall and falling energy prices have kept increases in the inflation rate low.
Posted by: sarah_oz@yahoo.com
| Reply via web post | • | Reply to sender | • | Reply to group | • | Start a New Topic | • | Messages in this topic (1) |
Belum ada komentar untuk "[TSP_Strategy] Inflation and Unemployment"
Post a Comment