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2025-12-17 22:02:05
[The Mystery of US Employment Data: Rising Unemployment but Stubborn Inflation, "U-star" Becomes the Fed's New Focus] ⑴ Current US economic analysis is shifting its focus from the neutral interest rate (R-star) to the unemployment rate (U-star or NAIRU) that does not accelerate inflation, as perplexing employment data challenges traditional models. ⑵ Despite the unemployment rate rising to a four-year high of 4.6% and job growth nearly stagnating, inflation remains stubbornly around 3%, consistently above the Fed's 2% target. ⑶ Fed officials' median estimate for "U-star" is 4.2%, and the current unemployment rate is already above this level, but inflation has not fallen as theoretically expected, suggesting that the actual level of "U-star" may be higher than current model predictions. ⑷ If the unemployment rate continues to climb to 5%, even if inflation remains high, dovish voices within the Fed may strengthen, increasing pressure for further interest rate cuts. (5) In the coming months, the debate over whether rising unemployment will actually suppress inflation will intensify, and the answer will largely depend on the actual location of the elusive “U-star,” which will directly affect the Fed’s interest rate path.
