We do not know that the “natural rate of unemployment” is roughly equal to the current unemployment rate.

The problem is that those making that argument are implicitly asserting that they know that the “natural rate of unemployment” – the lowest rate consistent with stable inflation – is roughly equal to the current unemployment rate. 

That is, they believe we’re at full employment. 

But the truth is they have no way of knowing that, and one key indicator – inflation – suggests they may be wrong.


Jared Bernstein, chief economist for Vice President Joe Biden, at John Mauldin 18 February 2018