Data, however, doesn’t mince words.
The Fed’s latest economic projections, released Wednesday alongside a massive third consecutive interest rate hike of 75 basis points
, show that the central bank is expecting the nation’s unemployment rate to grow to 4.4% next year —
up from August’s 3.7% — and potentially as high as 5%. Assuming no change in the labor force, that would mean around 1.2 million more people will be unemployed. At the high end of the Fed’s range, at 5%, that would be 2.2 million more unemployed.
“There is a gradual realization that the rose-shaded glasses view of being able to reduce labor market tightness by just curbing the number of job openings is gone,” said Gregory Daco, chief economist at EY-Parthenon. “We have now an implicit realization that in order to cool the labor market there will need to be a significant increase in the unemployment rate and there will need to be a cooling of employment growth with potential employment losses.”
Through the first…