We could scarcely believe it.
At 1:36 PM ET, we got an email with this as the subject:
Kocherlakota is Narayana Kocherlakota, and he's head of the Minneapolis Federal Reserve. And what's really interesting about Kocherlakota is that he used to be something of a hawk, arguing that the Fed couldn't do much about unemployment, because the unemployment crisis was "structural" not "cyclical."
He explained this view in an August, 2010 speech, where he said that the lack of a robust labor recovery had to do with employment "missmatch", wherein companies had jobs to fill, but the labor force lacked the skills to satisfy those openings. If you think that's the problem with the economy, then Fed easing doesn't do much good.
This was the key part of that speech:
At 1:36 PM ET, we got an email with this as the subject:
FED'S KOCHERLAKOTA WANTS RATE AT ZERO UNTIL 5.5% UNEMPLOYMENT
Now if you don't know why this is so shocking, let's go back.Kocherlakota is Narayana Kocherlakota, and he's head of the Minneapolis Federal Reserve. And what's really interesting about Kocherlakota is that he used to be something of a hawk, arguing that the Fed couldn't do much about unemployment, because the unemployment crisis was "structural" not "cyclical."
He explained this view in an August, 2010 speech, where he said that the lack of a robust labor recovery had to do with employment "missmatch", wherein companies had jobs to fill, but the labor force lacked the skills to satisfy those openings. If you think that's the problem with the economy, then Fed easing doesn't do much good.
This was the key part of that speech:
So the news about inflation and GDP is in
the “good, but certainly could be better” category. However, the lack
of vitality in the U.S. labor market can only be termed disturbing. The
national unemployment rate remains at 9.5 percent in July. Private
sector job creation remains weak—only 71,000 net private sector jobs
were created in July.
If one digs deeper into the data, the
situation seems even more troubling. Since December 2000, the Bureau of
Labor Statistics has been keeping data on the job openings rate, which
is defined as the number of job openings divided by the sum of job
openings and employment. Not surprisingly, when job openings rise, the
unemployed can find jobs more readily, and the unemployment rate
typically falls. The inverse relationship between unemployment and job
openings was extremely stable throughout the 2000-01 recession, the
subsequent recovery, and on through the early part of this recession.
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