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Economic Brief

Sept. 5, 2019

Richmond Fed Research Projects Lower Trend Unemployment

The Richmond Fed’s latest Economic Brief projects that the trend unemployment rate will decline from 4.6 percent this year to 4.3 percent in 2028 as the U.S. population continues to become older and more educated.

The trend unemployment rate is similar to what Federal Reserve policymakers refer to as the “longer-run rate,” the rate that the U.S. labor market would attain during the next five or six years assuming “appropriate monetary policy” and no “further shocks” to the economy. Since the longer-run rate and the factors determining it are not directly observed but must be inferred from observations on the economy, it should not be surprising that among Federal Reserve policymakers estimates of the longer-run rate vary.

The authors of the brief emphasize that demographic forces — especially age and level of education — have profoundly shaped the dynamics of unemployment and labor force participation since 1976, producing a steady decline in the trend unemployment rate from 7 percent to 4.6 percent. They expect the rate to continue to decline at about the same pace for the next nine years.

The Richmond Fed’s Economic Brief series provides web-exclusive essays on economic issues and trends. Sign up to receive an email notification when a new essay is posted.

As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.


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Jim Strader (804) 697-8956 (804) 332-0207 (mobile)