Fed Says Joblessness Would Be 7% With Less Consumer Doubt

The U.S. unemployment rate would be around 7 percent instead of 8 percent to 9 percent without the current level of doubt among consumers about economic issues including fiscal policy, a Federal Reserve study showed.

“Uncertainty has pushed up the U.S. unemployment rate by between one and two percentage points since the start of the financial crisis in 2008,” Sylvain Leduc and Zheng Liu, who are research advisers at the San Francisco Fed, wrote in a paper released today. “The private sector responds to rising uncertainty by cutting back spending, leading to a rise in unemployment and reductions in both output and inflation.”