If we use a simple labor scoreboard, we can see why the Fed is being careful but sketchy on what it wants to do with policy. This scoreboard of key variables is based on work presented in Institutional Investor. It gives a good simple picture of the labor market. All the measures have improved over the last two years, but they may not be above pre-recession levels. If we give a (+/-), the levels are close to the pre-recession levels.
The problem is with labor confidence and utilization which are more forward looking measures. How these are weighed by the Fed is unclear, but if you want a clear sign for when rates will be raised look to the battery of labor stats. If there are some permanent changes to the labor market, the Fed may not have the ability to get to the magical pre-recession levels. This could be the real problem.
Labor market: (+) better than pre-recession peak; (-) worse than pre-recession peak
Leading indicators
1. Temporary help employment; +
2. Companies unable to fill job openings; +
3. Initial claims: +
Employer behavior
1. Payroll employment: +
2. Job openings; +
3. Hires: +/-
Confidence
1. Hiring plans; +
2. Job availability; +/-
3 Quits: +/-
Utilization
1. Unemployment; -
2. Marginally attached workers; -
3. Job finding rate: -
4. Work part-time for economic reasons; -
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