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The Fed Doesn’t Think the U.S. Economy Is at Full Employment, After All

Wall Street Journal (03/18/13) Ben Leubsdorf

Officials at the U.S. Federal Reserve now believe that the U.S. economy is not at full employment after lowering their estimate of the longer-run jobless rate to a range between 5.0% and 5.2%. They had previously projected a longer-run unemployment rate between 5.2% and 5.5%. Inflation could become an issue if the Fed tries to push the overall unemployment rate—which hit 5.5% last month—any lower. Still, projections released yesterday have the unemployment rate falling to 5.0% to 5.2% in the fourth quarter of 2015, and declining a bit further in 2016 and 2017.