Happened to take a look at the so-called Natural Rate of Unemployment at FRED:
I wanted to compare the two versions of the graph at ALFRED. Clicked the link from the FRED page to bring up NROU at ALFRED. It always comes up as a bar graph at ALFRED -- maybe so we know we're not in Kansas anymore. (Or wherever FRED is.)
I switched the setting to make it a line graph and ...
Let me say that again. The older line, the blue one, is from ten months ago. The newer line, the red, shows changes going back to 2007.
Well, I still want to compare the new one to the one from August 2011:
Since the subject has come round to questioning the NROU numbers, did you notice that on all these graphs a vigorous uptrend begins before 1960? I think the uptrend misrepresents the economic conditions of the time. Golden age, remember?
The Natural Rate of Unemployment is the lowest level of unemployment at which inflation remains stable. When they estimate the Natural Rate of Unemployment they take inflation into account. The NROU depends on unemployment and inflation.
If you add the unemployment rate and the inflation rate together to get the "misery index" and then compare the misery index to NROU ...
And then, in the latter 1990s, the Misery Index starts climbing and continues upward for a dozen years. Yet the NROU runs flat, then falls until it is forced upward by crisis and recession.
It seems to me that a lot of wishful thinking is involved in the calculation of the Natural Rate of Unemployment.