Natural Rate of Unemployment

Has the U.S. economy achieved full employment equilibrium yet? Explain how we define ‘full employment’ and how you can tell whether that goal has been achieved. Use appropriate data to support your answer (see below). Be sure to cite the sources of your data in your essay.

Use the Federal Reserve Bank of St. Louis’ estimate of the Natural Rate of Unemployment (short-term) at http://research.stlouisfed.org/fred2/series/NROUST Drag your cursor across the graph to find the estimate of the natural rate of unemployment for the second quarter of 2017 (2017 Q1). (The graph shows estimates of the natural rate from 1950 to 2027).
Use the Bureau of Labor Statistics website (bls.gov) to find the most recent estimate of the actual unemployment rate.

Read the Introduction (first five pages) of the article “A Search and Matching Approach to Labor Markets: Did the Natural Rate of Unemployment Rise?” by Mary C. Daly, B. Hobijn, A. Sahin, and R. G. Vallet (see below). How does this article explain the pattern in the Natural Rate of Unemployment graph from 2007 to 2012?