The magic number for Fed guidance

January 26, 2013 

If unemployment was at 6.5 percent in America, almost 2.1 million more people would be working than today. At the rate the country has been creating new jobs each month, it would take more than a year to find work for that many people.

Keep "6.5 percent" in mind when the Federal Reserve meets Tuesday and Wednesday to talk about its efforts to push interest rates down in hopes that cheap cash will spur investment -- and job creation. After all, the central bank has promised to keep its target interest rate near zero as long as 6.5 percent of Americans in the workforce are without work.

The Fed has put other conditions on maintaining its historically low interest rate, such as low inflation, but official measures remain tame. So it's job growth the Fed is looking for.

It won't have to wait long for the latest update. On Friday, the first jobs report of 2013 will be released. Hiring has been a slow grind, but it has been positive. Finding work in January, though, can be tricky. Winter weather, a hangover from the holidays, and seasonal work ending can slow down hiring.

It will be months, maybe even a couple of years, before the U.S. unemployment rate hits 6.5 percent. There is nothing magical about that number, but as long as the Federal Reserve has it in its sights, so should we.

Tom Hudson, anchor and managing editor of "Nightly Business Report," can be followed on Twitter HudsonNBR.

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