[mEDITate-OR:
not see what CR sees about the increase in the interest rate.
In the second article:
Jim @ CR picks up on an NYT article by Ms. C..., aka Catherine Rampell,
to show U.S. when and by how much the Fed has increased interest rates...
AFTER the peak of unemployment.
Very interesting article and point of view.
In the second article
CR points out to U.S. that "unemployment" is not goin' anywhere, very fast.
POINT:
And, THAT is significant to the first issue.
Bcuz IF it is true that we are in an "L" recovery...
as opposed to a "V" or "W" or "J" or "U" recovery...
the FED should NOT use past guidelines/timing.
We do not see new private sector jobs increasing, much.
While we DO see govt construction jobs opening up...
they are being matched, if not exceeded, by govt layoffs.
The long term unemployed, AND the off the charts discouraged...
are NOT finding jobs.
So..., until we DO see some job creation...
if the Fed up interest rates and/or
the Fed Govt does not extend or increase economic stimuli...
not only is the "recession" NOT over...
but, they will make the same Great Depression mistake that Roosevelt made...
assuming that the worst was behind U.S. and cutting back too soon.
It could not only get uglier, but loose U.S. a "Japanese style" decade.
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In the week ending April 24, the advance figure for seasonally adjusted initial claims was 448,000, a decrease of 11,000 from the previous week's revised figure of 459,000.
The 4-week moving average was 462,500
an increase of 1,500 from the previous week's revised average of 461,000.
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Short answer: Longer than many analysts expect.
This graph shows the effective Fed Funds rate (Source: Federal Reserve) and the unemployment rate (source: BLS)
In the early '90s, the Fed waited more than a 1 1/2 years after the unemployment rate peaked before raising rates. The unemployment rate had fallen from 7.8% to 6.6% before the Fed raised rates.
Following the peak unemployment rate in 2003 of 6.3%, the Fed waited a year to raise rates. The unemployment rate had fallen to 5.6% in June 2004 before the Fed raised rates.
Although there are other considerations, if we assume the unemployment rate peaked in October 2009 - and add 18 months - then the Fed would probably wait until early 2011 to raise rates (at the earliest). My guess is the Fed will probably wait until the unemployment rate is closer to 9% before removing the "extended period" language, and it is unlikely they will raise rates until the unemployment rate is below 8%.
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