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The biggest news this past week was Janet Yellen’s first post-FOMC meeting speech and press conference as the Federal Reserve Chairwoman. While I have the utmost respect for her accomplishments, every time I hear her speak all I can think of is my white haired, 75-year old grandmother baking cookies in her kitchen. This week’s “Things To Ponder” covers several disparate takes on what she said, didn’t say and the direction of the Federal Reserve from here.
In order to give these views context, I have included Yellen’s post-meeting news conference. This is best viewed with a glass of milk and some warm, fresh chocolate-chip cookies….“just like Grandma used to make.”
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Quote Of The Day:  “Bull Markets Are Just Like Sex, It Feels Best Just Before It Ends.” by Barton Biggs
1) Dropping The 6.5% Unemployment Target by Howard Gold via MarketWatch
I have written many times in the past, most recently here, that the 6.5% unemployment target for the Federal Reserve was not a good measure of the true state of employment in the U.S. Specifically I stated:
“The difference between today, and 1978, is that in 1978 the LFPR was on the rise versus a sharp decline today. However, as I stated previously in ‘Fed’s Economic Projections – Myth vs Reality’ this leaves the Federal Reserve in a bit of a predicament.
‘The problem that the Fed will eventually face, with respect to their monetary policy decisions, is that effectively the economy could be running at ‘full rates’ of employment but with a very large pool of individuals excluded from the labor force. Of course, this also explains the continued rise in the number of individuals claiming disability and participating in the nutritional assistance programs.   While the Fed could very well achieve its goal of fostering a ‘full employment’ rate of 6.5%, it certainly does not mean that 93.5% of working age Americans will be gainfully employed. It could well just be a victory in name only”
This is particularly the case when roughly 1 out of 3 people are no longer counted as part of the work force, 1-out-of-3 individuals are dependent on some sort of social support program, and over 17% of personal incomes are comprised of government transfers.”
