Friday, December 14, 2012 - 5:43 AM

How Long To Get To 6.5% Unemployment And Higher Interest Rates?

From CNNMoney.com

The Federal Reserve predicts it will keep stimulative policies in place until the unemployment rate falls to 6.5%. But just how many jobs will it take to get there?

Read more

In summary, don't expect higher interest rates anytime soon. The article suggested that a very optimistic scenario puts the date in 2014. A mildly optimistic date is 2015, and a date based on recent unemployment data suggests 2018.

KenBDG5,175 posts since
Nov 29, 2009
Rep Points: 117,599

1. Friday, December 14, 2012 - 7:36 AM

Given the accuracy of the Fed's predictions of economic growth, so far, one should take their predictions of unemployment with a shrug of the shoulders.

Shorebreak1,439 posts since
Apr 6, 2010
Rep Points: 6,150

2. Friday, December 14, 2012 - 9:36 PM

There is an interesting article in Barrons by Randall Forsyth titled, "The End of the Bond Market May Be Nearer Than You Think". He quotes a guy named Jim Sullivan, the chief US economist for High Frequency Economics, who says that the unemployment rate will get to 6.5% much faster than most people think. He also quantifies the carnage on ten-year treasuries if interest rates rise by 50 basis points. An increase of that magnitude would mean bond holders would lose more than two years of interest. Definitely a contrarian point of view.

lou361 posts since
Aug 3, 2010
Rep Points: 2,041