What is the highest level of employment that the U.S. economy can sustain?
A high level of employment fosters broad-based economic opportunities and benefits for all Americans. Given the dynamic nature of the economy, it is not possible to know exactly how high employment may be able to rise without causing excessive inflation. The highest level of employment that the economy can sustain in a context of price stability changes over time as the jobs market changes. For example, employers may use new ways to search for workers, and workers may use new ways to find jobs. Even in good times, a healthy, dynamic economy will have at least some unemployment as workers switch jobs and as new workers enter the labor market.
For all these reasons, as it seeks to judge how far the economy is from maximum employment, the Fed will assess a wide range of information on the labor market and not rely too much on any single estimate of a sustainable longer-run unemployment rate. Furthermore, the Fed recognizes that employment may at times run above real-time assessments of maximum employment without necessarily creating risks to price stability.