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Researchers from the Federal Reserve have claimed that there are a “number of reasons to be optimistic” that unemployment in the United States will continue to decline in the long term.
Central bank economists specifically cited the decreasing rate of unemployment in the country during the past six months, the improving employment to population ratio, and the stabilizing participation rate in the labor force as the primary factors for their conclusion.
Unemployment rate in the US has improved faster than expected this year after falling to a six month low of 6.1% in last June from 9.6% in 2010. The central bank, whose chair, Janet Yellen, sees unemployment as a “grave concern”, had initially pegged the end of 2014 as the time for the rate to reach a comparable level.
A majority of the labor market gains could be accounted for by long term jobless individuals finding new employment says researchers Tomaz Cajner and David Ratner. The percentage of people out of work for more than six months decreased from 45.3% in 2010 to 32.8% today. The gauge’s previous peak was 26% in 1983 and had never gone beyond 30% prior to 2009 according to data from the US Labor Department. Meanwhile, the participation rate for the labor force, a measure of the share of individuals at a working age, matched the lowest level since 1978 of 62.8%.
Yellen called the improvements a “healthy development” during her testimony before Congress last week saying that there is no significant difference between those who have been jobless for a long period and those only recently unemployed in terms of opportunities. She added that, “As confidence in the recovery grows and it strengthens, we should definitely expect to see improvements.”
A report on monetary policy is expected to be released by the Federal Open Market Committee on July 30th.
