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Federal Reserve Bank of Boston President Eric Rosengren spoke on Thursday, Feb. 6 at New College of Florida, cautioning the audience that even though GDP growth is good and the unemployment rate is dropping, the Fed shouldn’t end its policy of keeping short-term interest rates low (something that irks a lot of retirees). Inflation is too low and there are red flags in the U.S. labor market, he says, and “I firmly believe that monetary policymakers should remain quite patient in removing accommodation.” His message? Keep the stimulus going for now.

Then a day later, on Feb. 7, as if to make Rosengren’s point, the January jobs report came out.

Like Rosengren said, the unemployment rate is dropping, something that should make us all happy. The U.S. economy added 113,000 jobs last month, bringing the unemployment rate down to 6.6 percent compared with December’s 6.7 percent.

But Rosengren says the overall unemployment rate we love to quote—6.6 percent, in this case—doesn’t fully capture what’s really happening in the labor market.

The real number, he says, should capture not just the unemployed (people who have actively looked for work but couldn’t find any). The rate also should add the 917,000 discouraged workers (meaning they’ve stopped looking for work because they believe there’s no job available for them), the 1.5 million marginally attached (they’ve stopped looking for other reasons such as health issues, family responsibilities, transportation problems) and the 7.8 million people working part-time when they’d rather be working full-time. Add it up, folks. That’s more than 10 million people we haven’t counted in the 6.6 unemployment rate.

Among Fed presidents, Rosengren has been a strong supporter of keeping the stimulus in place since “we’re far from where we need to be” and dissented when the Fed decided in December to begin cutting back on buying bonds. His comments at New College are noteworthy as the Fed meets again in March to discuss its slow tapering of bond purchases. Will the weak jobs report and a wider view of what’s happening in the labor market make the Fed’s decision to beginning tapering the stimulus look a little too hasty?

Rosengren is the third Fed CEO to speak at New College in the last couple of years. He only gives about a dozen speeches a year, so how did he end up at tiny New College? The local connection to all these Fed presidents is Rosengren’s friend, David Kotok of Sarasota’s Cumberland Advisors, who is on the board of Philadelphia-based Global Interdependence Center, which sponsored this event and numerous others at New College. And by the way, one of the previous presidents to speak, William Dudley, the president of the Federal Reserve Bank of New York, is also a New College alum.  -By Susan Burns

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