"[…] the current unemployment rate remains above most forecasts of its expected long-run level"
- Narayana Kocherlakota, president of the Minneapolis Fed
More positive news for the U.S. job market: JOLTS job openings increased to 4.635 million in May, significantly more than expected, and are back to the pre-crisis high. Despite being a lagging indicator, it has a high impact as the Fed watches closely the data. Job openings rose in nondurable manufacturing, health care and social assistance; however, declined in in retail and entertainment, according to the Bureau of Labor Statistics. The Job Openings and Labor Turnover Survey was considered by ex-Fed Chair Ben Bernanke as a wider measure of unemployment. Also current Fed Chair Janet Yellen highlighted its importance. However, more jobs does not mean much more spending, as the jobs pay lower salaries.
Meanwhile, Narayana Kocherlakota, President of the Minneapolis Fed, poured cold water on recent positive data, saying he does not see the U.S. unemployment rate's rapid decline being sustained in the coming months. He expects the jobless rate to fall below 6% by the end of the year, when he projects core inflation around 1.6%, while in the long run he anticipates the unemployment rate to decline to around 5%. Kocherlakota believes that the Fed is underperforming on its goal of reaching maximum sustainable unemployment. The economic slowdown in the first quarter means the U.S. will be "fortunate" to get 2.5% GDP growth this year, he added.
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