Making sense of the slack in the US labour force

US

A growing labour force is an important driver of GDP growth, but the US is seeing productivity fall, says Kathy A Jones, vice president and fixed income strategist at Charles Schwab.

At her first Federal Open Market Committee (FOMC) meeting as chair, Janet Yellen presided over a shift in Federal Reserve policy. Instead of using quantitative targets such as the 6.5% unemployment rate as a threshold for raising rates, the Fed will now take more factors into account and use a qualitative approach. In my view, this is not much of a change. The more important shift in Fed policy has been its move to slow down the pace of liquidity it has been adding to the financial system by reducing its bond purchases by $10bn at each meeting this year. One eye is being kept on the F...