Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

The short answer is “not much” because these gaps, as you know, widen out and come back in. You’re right that recently there has been a remarkably large gap between the payroll and the household survey data. Our reason for emphasizing participation in our analysis of the gaps that have developed between the payroll and the household employment data is that we’re focusing on the unemployment rate because of its implications for measuring the slack in the labor market. Movements in household employment have effects on both the numerator and the denominator of the unemployment rate and therefore have less effect on the rate. What has really surprised us is the extent to which the unemployment rate has stayed relatively low given the weakness that we have seen in payroll employment. As we highlighted in our presentation to the Board yesterday, we have some shreds of evidence to suggest that this development is probably related to a broader discouragement in the workforce than the “discouraged workers” question in the survey would indicate. As a consequence of that, while we’ve seen less of a run-up in the unemployment rate during this period of weakness, we think we’re also likely to see less of an improvement in the unemployment rate once economic growth really begins to pick up.

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