US and EZ: Unemployment rate close to the structural unemployment rate - Natixis

The unemployment rate is probably now close to the structural unemployment rate in the United States and the euro zone, which means that they have completed a full cycle since the peak unemployment rate in 2009 in the United States and in 2013 in the euro zone, explains Patrick Artus, Research Analyst at Natixis.

Key Quotes

“But the fact that these two countries (regions) have completed a full growth cycle is not recognised and accepted:

• Their public opinions do not have a sense of prosperity;
• Their central banks still have expansionary monetary policies;
• Their governments (except in Germany) are still conducting expansionary fiscal policies.”

“Weirdly, no one seems to realise that the growth cycle has been almost fully completed

• Public opinions, central banks and governments are behaving as though the growth period was just beginning, and could still continue for a long period of time.
• But in reality, in both the United States and the euro zone, the unemployment rate is now close to the structural unemployment rate and the growth period will soon be ended. Weirdly, the idea that a full cycle has already been run is not accepted at present.”