U.S. Federal Reserve officials tout a decade of falling unemployment as among their major victories in fighting the economic crisis of 2007 to 2009.
Now they are beginning to worry they have been too successful. When unemployment falls as low as it is currently, Boston Federal Reserve bank President Eric Rosengren said in a new paper released Thursday as part of a review of Fed policy, recession has inevitably followed, with the central bank showing no success in fine-tuning the economy to a stable rest at full employment.
Policy forecasts have often projected such a "soft landing," he noted, and with unemployment at a near two-decade low of 3.9 percent the hope has risen again.
But since World War Two, periods in which joblessness has fallen below the estimated "natural" rate of full employment inevitably have been followed by a recession, with only a half a percentage point rise in the unemployment rate needed to kickstart the slide. The current estimate of "full employment" is around 4.5 percent.
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