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Robert Samuelson | Job Creation’s Glum Arithmetic

WASHINGTON — How long will it take to get to an unemployment rate of 6.5 percent? That’s the target the Federal Reserve wants to reach before it begins raising interest rates. The best guess of top Fed officials is two and a half years from now or mid-2015, according to Fed Chairman Ben Bernanke at his news conference last week. It’s a gloomy forecast; now come two economists who show that, under plausible assumptions, it could take a lot longer. How about 2018?

Michael Greenstone and Adam Looney of the Brookings Institution, a Washington think tank, did some rough calculations estimating the job growth needed to reduce the unemployment rate, 7.7 percent in November, to 6.5 percent. Their conclusion: If job creation’s modest pace, about 220,000 a month during the past year, continues, the Fed’s mid-2015 prediction will be fulfilled.

But of course, it may not continue. Greenstone and Looney also estimated what would happen under different rates of job growth, as the numbers below show. The first number represents average monthly job growth; the second shows when the country would hit 6.5 percent unemployment under such a scenario.

150,000 — Spring 2018

200,000 — Fall 2015

250,000 — End of 2014

300,000 — Spring 2014


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