What economic growth rate is required to halve U.S. unemployment?
Two points. I believe the Bureau of Labor Statistics has published some numbers in this area... I cannot find them at the moment though. I think you need to take these numbers with a grain of salt, though, because they cannot account for productivity and automation improvements that are being aggressively implemented. Companies aren't just bloodletting -- they are refactoring business processes and automating thousands of jobs away. I'm reminded of Say's Law (developed by Jean-Baptiste Say) which can best be reduced to: The market clears (i.e. there is always some price at which an item will sell in a market).  Full employment can always be obtained in any free market economy.  People may not be pleased, however, with their wage rate. There are, however, many deterrents to employment (at least in the US): These are just some I can think of off the top of my head.  I'm sure there are many others.
"Any answer for what to do in a taper will assume ceteris paribus because how markets initially react when they suspect a taper may immediately change depending on what data are released after the taper. For instance, I've seen Soros and a few other hedge fund managers hold shorts when expecting a taper because the theory is that the market may fall.  However, suppose the market falls 5%, but then positive employment numbers are released.  What then?  The same holds true for betting against Emerging Markets (EM), something I've seen Jesse Colombo and others suggest; the claim that Emerging Markets are in a bubble thanks to the U.S. Federal Reserve (the more money they release, the more the money goes overseas ...).  Again, this is possibly true, but if good data are released after the taper for these emerging markets, they could see growth and those with the shorts could get killed. TL;DR - when we ask about what happens after the taper, we have to remember we're assuming some things about everything else.   I do think that the ""safest play"" post taper is what Bill Gross mentioned about bonds (basically a bubble), as we should see interest rates rise and the Chinese seem to be reluctant to buy as much of U.S. bonds as they have in the past (though some, like Mish, assert the U.S. would welcome this).  The other play I like is the VIX (if you think the market will fall) or against (if you think the market will rise).  SVXY has been one of the best plays since 2011 (compare it to the SPY for the same time period)." "The economy refers to the macro view of economics and associated policy. Macro economic policy's target objective should be full employment.  With regard to wages, full employment leads to an increase in the ""frictional"" subset of unemployment. This type of unemployment is essentially unemployment by choice because of the confidence that jobs are available. When employees become scarce, wages rise.  Arbitrarily raising the minimum wage does nothing but increase inflation." "I can, but it takes a significant amount of time.   I'll do a short version which unfortunatley might leave more holes than you like. Basically, traders don't want to barter because it is hard to find the person with precisely the goods you want who wants to trade for the goods you have. Thus the need for ""coupons"" that represent value in a marketplace. Then you need to decide who gets to create coupons. If too many can issue them, problems arise, and no one trusts the coupons will be good later. Eventually you want one large bank/nation/trader to be able to issue them so everyone has the same level of trust in them, and you don't have the economic inefficiencies of many coupon issuers.  Next, the number of coupons needs to be enough to facilitate trade. If the amount of trade increases a lot, and the number of coupons doesn't increase similarly they become worth more, and people start to hoard them. This causes deflation, which causes less investment, which causes less growth, which hurts everyone in the long run.   If there are too many coupons added, this causes inflation, which causes people to spent them quicker instead of holding them. For reasons I won't cover here slight, predictable inflation is much better than deflation, so remember inflation is slightly preferred. Note that inflation is often caused not by the number of coupons but by external price changes.  Now, for a modern economy to do well, somone has to watch the economy, measure it carefully, and add/subtract coupons into the system as needed. Coupons, like all money, have no real value (whatever that means), but only have value because the holder expects to be able to trade them *later* for goods and services. You cannot eat coupons, use them for shelter (usually!), or wear them, but you want to trade them for such needs. The same is true for paper money, gold, stones, or almost whatever money system one uses. Money in all these forms is merely an IOU tradable for future goods.  The Fed is tasked (among other things) with making sure there is precisely enough coupons in the economy to keep trade functioning as well as possible. This is very hard to do since there are external and internal shocks to an economy (think disaster, foreign govts shutting off resources, rapid changes in people's tastes, etc.).   Central banks such as the Fed need to be independent of political control, since empirical evidence has shown that politicians tend to add more money to the system than is needed, because the short term gains give them votes, but the long term consequences (rapid inflation, unemployment, lower economic growth) are bad for society. This is why the Fed is largely out of congressional control, and large amounts of empirical evidence across hundreds of years and dozens of cultures shows this to be good.  Note: another function of the Fed is to be a lender of last resort to help prevent bank panics that were widespread in the 18th and early 19th century, something that none of us now remember, but it was a real problem. I'll skip that part for now.  So now we're at the point where the Fed needs to add/subtract coupons from society. To do this part justice takes significant time to cover all the reasons why various rules are in place (banking reserve requirements, for example), and you cannot learn it from one pass of reading.  But I'll try. Instead of being like the majority of internet fools that rail against the system, try to learn the *why* of all this, and you'll be much wiser and understand that it is all a pretty good system.  One method they use is the interbank lending rate. Banks have a reserve requirement, which is the ratio of coupons they need to have on hand as a ratio compared to the total coupons depositors lent them. This is usually around 1:10. The amount deposited that they can lend goes to business loans, school loans, mortgage loans, etc., and helps economies grow. Now when a bank on a given day falls short due to too many withdrawals, other banks (or the Fed) offers an overnight loan to meet reserve requirements, and the Fed sets the interest rate, which in turn drives other interest rates in the system.  This does not change the money supply very much.  Secondly, the Fed sets the reserve requirement, which vastly can change the amount of money available to society. But they change this rate so rarely (all the historical data is on the St. Loius Fed site, among others) that it is not usually an issue. I'll explain below how this can drastically change the money supply though the money multiplier.  Thirdly, and this is the part the poster above seems upset about, they conduct open market operations. This is the primary means by which the Fed exercises control over the number of coupons in play. The government, like businesses, like individuals, often needs to borrow money, in theory to invest in wise causes like infrastructure or perhaps money making enterprises such as technology investmeny (and I know what they often use the money for causes many to complain). The government, like companies, offers the sale of various contracts such as bonds to investors, who want a place to park some accumulated coupons for safety, and they get a return plus some interest. So the government sells bonds on the open market to investors, banks, pensions, foreign governments, basically to whomever wishes to purchase them at the market rate, and the government, like many individuals and banks, uses these loans to perform day to day functioning and possible smooth out volatility in spending needs. By law the Fed cannot purchase directly from Treasury. Now, once on the market, these bonds are traded, packaged, resold, etc., since they have inherent value, and since those owning them want to buy/sell them, perhaps before maturity date. This ""liquidity"" (ability to sell your goods) is necessary - fewer would purchase an item if they could not sell it when they desire. Thus bonds are bought, sold, and traded, and their prices fluctuate based on what the market thinks they are worth, just like any good.  Now, the Fed can buy/sell these bonds on the *open market*, like anyone else. So when the Fed wishes to increase the money supply, they can buy bonds that are not ""spendable"" money and inject money into the system. Note they now hold a bond that had at the time of transaction the same value as the money they injected. Note investors freely bought these from Treasury, meaning the market thought at the time of purchase that this was a good invesement. It is *not* the government merely wishing more money into existance. It is market forces that require more money for trades and is selling goods from the marketplace of (presumably) equal value to the Fed. This increases liquidity, but takes valuable assets from circulation. When the Fed wishes to shrink the money supply, they sell these bonds back into circulation basically by offering better terms than Treasury. In fact, you can find graphs of the Fed operations and see how every December they inject money for more Christmas shpping (need more coupons for more trade) and every January they extract some.  So open market transactions, buying and selling goods at market prices in the marketplace along with other traders, is how the Fed injects and removes money from the money supply. This is the primary mechanism that the Fed uses to control the number of coupons in the economy.  Finally, a little about reserve requirements and the money multiplier, since it affects so much of the number of coupons in play. This also I must simplify drastically. Each bank needs to hold 1/10 of all deposits in cash. The rest can be lent, which lands in another bank, which again can be lent, etc... Thus each $1 deposited can result in loans totalling 9/10 + (9/10)^2 + (9/10)^3 +... = 9 more dollars. Many people claim that banks are printing money, which is nonsense, since each also has an equal debt to pay to the person they borrowed from. When all loans are paid back there is no net money gain.  However, this allows for each $1 the Fed injects by buying bonds for there to be up to $9 in the economy, *if banks all loan to the fullest extent*. Banks tend to want to loan since loaned money makes them profit. Banks used to loan too much and runs on the banks caused significant problems, which is why laws were made to require *all* banks to have the same reserve requirement.  Now, when banks get scared and stop loaning, this 9 fold multiplier dries up, and the Fed has much less inpact on being able to target the proper number of coupons to keep the economy smooth. During the recent crash when banks stopped loaning, as each dollar was paid back on debts, there was significant shrinkage of available money for transactions, and this kills the economy. This is the ""liquidity crisis"".   Hope this helps. As I said, this is vastly simplified and I cannot go into all the reasons and historical items needed to understand it fully. It is a vastly complex (and necessarily so) and takes significant study to grasp the genius of it. It's similar to not being able to understand nuances of particle physics in one go, but as you study and work at it you see *why* things go as they do, and you learn all the failed methods (the gold standard is one example) that were thrown out for many good reasons.  Cheers." "Even though ""when the U.S. sneezes Canada catches a cold"", I would suggest considering a look at Canadian government bonds as both a currency hedge, and for the safety of principal — of course, in terms of CAD, not USD. We like to boast that Canada fared relatively better (PDF) during the economic crisis than many other advanced economies, and our government debt is often rated higher than U.S. government debt. That being said, as a Canadian, I am biased.  For what it's worth, here's the more general strategy: Recognize that you will be accepting some currency risk (in addition to the sovereign risks) in such an approach. Consistent with your ETF approach, there do exist a class of ""international treasury bond"" ETFs, holding short-term foreign government bonds, but their holdings won't necessarily match the criteria I laid out – although they'll have wider diversification than if you invested in specific countries separately." No, jobs enable demand to be met.  Economists are like physicists who work with equations like X=Y, but can't fathom the causal nature of the relationship...so they assume it's symmetric.  No.  Put the cart before the horse and you'll piss off the horse. "Full employment is a joke. Look at the [labor force participation rate](https://data.bls.gov/timeseries/LNS11300000) most gains in income are being seen with the top ~1%. Most people who have ""recovered"" are referring to the stock market. Which has seen tremendous growth. But IMO this is due to a lack of places to put money. Sure some people lost their jobs and now have one but I wouldn't say that on average we are any better off than pre 08." "This is the best tl;dr I could make, [original](https://web.stanford.edu/~chadj/AI.pdf) reduced by 99%. (I'm a bot) ***** &gt; The share of factor payments going to capital is given by  and the long-run growth rate of y  Y /L is gy = g , 1&amp;minus;&amp;alpha; where g is the growth rate of A. An increase in automation will therefore increase the capital share  and, because of the multiplier effect associated with capital accumulation, increase the long-run growth rate.  &gt; 10 Can A.I. affect innovation and growth through potential effects it might have on 9  1&amp;minus;&amp;rho; &amp;middot;&amp;theta;+n  Substituting in for other solutions, the long-run growth rate of the economy is gy = , where 1&amp;minus;&amp;phi; n is the rate of population growth.  &gt; S&amp;macr;L1&amp;minus;&amp;alpha; 1&amp;minus;&amp;alpha; Kt Kt A˙ t Kt&amp;beta; = S  1&amp;minus;&amp;phi; At At It is easy to show that these growth rates cannot be constant if  &amp;gt; 1.13 If the growth rates are rising over time to infinity, then eventually either gAt &amp;gt; gKt , or the reverse, or the two growth rates are the same.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/70vurg/artificial_intelligence_and_economic_growth_by/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~212175 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **growth**^#1 **AI**^#2 **automation**^#3 **share**^#4 **capital**^#5" "This is the best tl;dr I could make, [original](https://www.nytimes.com/2017/07/06/business/economy/united-states-economy-gdp-trump.html?&amp;amp;hp&amp;amp;action=click&amp;amp;pgtype=Homepage&amp;amp;clickSource=story-heading&amp;amp;module=first-column-region&amp;amp;region=top-news&amp;amp;WT.nav=top-news&amp;amp;_r=0) reduced by 89%. (I'm a bot) ***** &gt; Far from living up to expectations of a lift after Mr. Trump&amp;#039;s election, the growth rate in the first quarter turned out to be an anemic 1.4 percent.  &gt; Growth of 2 percent is not horrible, especially given that the recovery is now the third longest on record and that the unemployment rate is at 4.3 percent, the lowest in 16 years.  &gt; Macroeconomic Advisers, a St. Louis research firm whose crystal ball is highly regarded among forecasters, began the second quarter by calling for 3.6 percent growth but now estimates the rate will be more like 2.5 percent.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6llqna/hopes_of_trump_bump_for_us_economy_shrink_as/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~160661 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **percent**^#1 **more**^#2 **rate**^#3 **growth**^#4 **economist**^#5"