leave rates low

In August 2010 Narayana Kocherlakota, head of the Minneapolis Federal Reserve, said in a speech, "Since December 2000, the Bureau of Labor Statistics has been keeping data on the openings rate, which is defined as the number of job openings divided by the sum of openings and employment. Not surprisingly, when job openings rise, 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."

Kocherlakota went on to say that the stable relationship began to break down in June 2008. The job openings rate has risen by about 20 percent between July 2009 and June 2010. We would expect unemployment to go down. What's happened?

There is a mismatch. People want to work, but can't find the appropriate job and businesses have jobs but can't find the appropriate people to fill them.At the Jackson Hole meeting a strong case was made that structural unemployment is a myth. The notion that demand is the issue is still alive and well. Central bankers are concerned about inflation and don't like the easy-money policy. But Mr. Kocherlakota has since changed his stance on the structural argument. He now makes a case for the cyclical unemployment issue. Hence he has said to leave rate at zero, or nearly so until the unemployment rate hite 5.5 percent.

businessinsider.com was the source of this post

Recovery is needed to help the job market. Ben Bernanke announced QE3 mentioning more jobs are needed for a good, sustainable recovery to take place. Housing may be stabilized with QE3, but job creation remains to be seen.

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