From Deutsche Bank on the US unemployment rate: Our analysis suggests that at least 50-60% of the decline in the participation rate is due to longer-term,...

Tom McKay

From Deutsche Bank on the US unemployment rate: Our analysis suggests that at least 50-60% of the decline in the participation rate is due to longer-term, structural factors, such as demographics and we expect the participation rate to continue to decline gradually. As a result, we anticipate that the participation rate will remain between 63% and 63.5% through the end of 2014, with realizations below the current level of 63.3% most likely. Under our most likely scenario, the unemployment rate hits the Feds 6.5% threshold for rate hikes before 2015, ahead of FOMC median projections. However, we believe that this will cause a communication headache rather than an earlier than anticipated tightening, as the Fed downplays the declining unemployment rate, and instead highlights continued weakness in the participation rate, employment-population ratio, and other labor market indicators. We see the first rate hike coming in 2015 H1.


Tom McKay

I'm the Managing Director and Co-Founder of Livewire. I'm passionate about collecting and curating the markets most informed insights every day so that our members can discover new investment ideas. If you would like to get in touch - please use...

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