Fed minutes provide Jackson Hole map

What will Yellen say?

Because access at this stage to Yellen’s speech and any of the papers that accompany discussions at today’s Jackson Hole Symposium is ‘limited’, a look to the guidance that Chair Yellen has in here Keynote address on Labor Markets would be instructive. The minutes to the July FOMC meeting, released on Aug. 20, is the latest and most telling guidance Yellen takes with her to today’s speech.

The Minutes offer both ‘Staff’ and ‘Participant’ views on the labor market, outlined below, that indicate a strengthening of the employment picture that had not been earlier noted. It is widely understood that Yellen takes a view of labor markets well beyond the information confined in the headline unemployment rate. The Minutes do a good job of detailing many of the components of the labor market that the Chair would consider in assessing labor market conditions and is thus very instructive.

The Staff had shown a strong reading of labor market in the minutes. Their assessment included nine areas of labor market variables, of which six were constructive, two neutral and only one (part-time employment for economic reasons) showed lacking.

Participants at the FOMC meeting were even more constructive of labor market conditions, rating 9 of 10 variables mentioned as having improved. Interestingly, Participants included a positive assessment of change in part-time employment for economic reason; an area the ‘staff’ had offered a lesser assessment.

Outlines of their assessments are below. The complete report on the analysis of the minutes is included in:  Analysis of Minutes of the Federal Open Market Committee; July 29-30, 2014.


Staff Labor Market Assessment

Labor: ‘Measures of labor market conditions generally continued to improve…’ 

  1. ‘…nonfarm payroll employment increased strongly in June…’- ‘…largest since the first quarter of 2012’
  2. ‘…unemployment rate declined to 6.1 percent in June…’
  3. ‘...labor force participation rate was unchanged…’
  4. ‘…employment-to-population ratio edged up…’
  5. …rate of long-duration unemployment moved down…’
  6. ‘…share of workers employed part time for economic reasons edged up…’
  7. ‘…Initial claims for unemployment insurance declined further…’
  8. ‘…rate of job openings rose further in May,…’
  9.                               ix.        ‘…rate of hiring was unchanged and remained at a modest level.’

Of the 9 labor variables mentioned, ‘a’, ‘b’, ‘d’, ‘e’, ‘g’, and ‘h’ were constructive (67%), ‘c’ and ‘i’ were neutral (22%), and ‘f’ was weak(11%).

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