The former Federal Reserve Chairman noted that the sluggish growth of economy in the United States will prevent any reduction or cuts in the jobless rate, which is prevailing at present. He quotes the absence of increase in labor force as the reason behind the minimal decline in unemployment recently.
The unemployment rate in United States had remained at 8.1 percent in the previous year. However, this rate dropped to 7.6 percent in March, 2013 and further to 7.5 percent in April, 2013. The Federal Reserve is however not satisfactory with these reductions in the jobless rate.
The government aims to move the unemployment rate below 6 percent, the rates which prevailed in July, 2008 before the deep economic crisis had occurred. Despite effective improvements in the labor market conditions, the unemployment rate had not moved to balance accordingly.
Paul Volcker, the former Federal Reserve Chairman had effectively managed to keep the unemployment rates to an eight year low of 5.7 percent in 1987, during his last year at the Federal Reserve. This was achieved by reversing the interest rate increases which brought down the inflation levels well below from the highest of 15 percent.
Volcker however notes that the present jobless rate would remain above 6 percent for at least another two years, given the sluggish growth in the US economy. He points out that the recent improvement in the jobless rates is mainly due to the labor force remaining stagnant without any increase in its level.
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