The Committee first adopted the “substantial improvement” test at the September 2012 meeting, so it is appropriate to measure the economy’s progress against economic conditions at that time. When the Committee met in September, the unemployment rate stood at 8.1 percent. Today, just nine months later, the unemployment rate is 7.6 percent – a larger decline than most FOMC participants expected in September.
At the time of the September meeting, nonfarm payrolls were reported to have increased at a monthly rate of 97,000 over the prior six months.8 Today the trailing six-month average payroll growth is 194,000. Other labor market indicators also show moderate progress, including aggregate hours worked, initial unemployment insurance claims, the duration of unemployment, and the share of long-term unemployment.