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By HaleStewart November 14, 2013 8:32 am
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Employment Slack Gives Central Banks Plenty of Room To Keep Rates Low

The charts below show the unemployment rate for the EU, US and UK, respectively.  The EU and US’ combined GDP is nearly $28 trillion dollars, accounting for a large portion of the world’s economic output.  The UK, while somewhat smaller, is still one of the world’s 10 largest economies. 

Low unemployment leads to upward wage pressure, as employers are forced to offer higher salaries to attract a diminishing pool of potential employees.  As the charts below show, there is currently a large pool of available talent which actually helps to contain employment related costs.  So long as unemployment remains at these levels, upward wage pressure will be more or less contained.  This helps to keep inflation at bay, thereby allowing central banks to keep rates at low levels.

 

 

 

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