Just a quick follow up to the slow-growth post from last night.
The figure below shows an unemployment rate forecast, kindly provided by Mark Zandi of Moody’s Analytics.
Based on the type of relations I presented last night, this forecast clearly presumes above trend GDP growth, which in turn assumes current headwinds are largely temporary. Let’s all hope that’s right.
But even if it is, the point here is that while the change is solidly headed in the right direction, the levels remain much too high. Even at 8% unemployment, the job market won’t be providing ample opportunities to jobseekers nor put enough pressure on the wage growth of jobholders.
Source: Mark Zandi, Moody’s Analytics