In fact, now standing at 5.9 percent, the unemployment rate has fallen about 4 percentage points from its high – and a full percentage point over the last year. Other measures of labor market health also suggest significant improvements: Notably, layoff rates are low and job opening rates are back to their prerecession levels. But we still aren’t back to full labor market health. At 5.9 percent, the unemployment rate remains above what most people think of as its long-run neutral level. For example, according to the central tendency in the FOMC’s latest Summary of Economic Projections, 1 the estimate of the neutral unemployment rate is between 5-1/4 to 5-1/2 percent, with my own judgment at the bottom of this range. This leaves a significant gap between our goal and current conditions. Moreover, the labor force participation rate has dropped a good deal. Most of the decline in labor force participation since 2000 is due to demographic trends, such as baby boomers moving into retirement age, and long-running trends, such as reductions in male and teenage labor force participation. These trends are structural in nature, and monetary policy is not the appropriate policy tool to address them. Nonetheless, the labor force participation rate has fallen somewhat more than what would be expected given these structural trends. And it is  1  2  Federal Open Market Committee (2014). BIS central bankers’ speeches  also lower than what would be expected from its historical relationship with the unemployment rate.
I look forward to comments from Robert and Catherine and the audience. Thank you once again for having me here today. 3/3  BIS central bankers' speeches