Chart of the Day
Posted at 10:30 a.m. on Oct. 23, 2013
— Gavyn Davies provides this “spider diagram” showing how a number of economic indicators are faring since they reached rock bottom during the Great Recession. For each indicator, the center represents their lowest point, the black circle shows the long-run normal level, the red line is the level when the Federal Reserve announced QE3, and the blue line is the level today.
“It is clear that in most respects, labour market activity has indeed improved significantly since QE3 started, but there is one crucial exception, which is the employment/population ratio. This…has in fact flatlined throughout the recovery, indicating that the number of jobs in the US economy has grown only in line with the number of people available for work.”
“If the Fed waits until the employment/population ratio improves substantially, then it will not taper for a very long time. But it seems that they are not fully convinced by the message this statistic is giving.”