This rapid drop in unemployment - call it the "Obama Recovery" -
caught none other than the Fed completely unaware, whose 6.5%
unemployment rate tightening threshold is now in tatters, as it the
credibility of the Fed's forward guidance as the Fed will have no choice
but to scrap all unemployment QE ending, rate hiking "thresholds" at
its next FOMC meeting.
So what happened to the unemployment rate that it dropped so fast it
surprised and embarrassed even the "venerable" Federal Reserve, which
had initially expected a 6.5% unemployment rate some time in 2015. To
get the answer we go back in time to the last (and only previous) time
when the US unemployment rate dropped from roughly 10%, which was in
June 1983, to 6.6%, which took place three and half years later, in
December 1986 - let's call it the "Reagan Recovery" in short.
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