On a gut level, the idea of high unemployment brings feelings of despair and insecurity to workers and economists. So one might assume that extremely low unemployment would be intrinsically good. Not so, says Joel Naroff. If the unemployment rate dropped to 3.5%, as analyst Ed Yardeni predicts, Naroff says the negative effects could spread from big business to the Fed to interest rates. The two sparred briefly over the issue today on "Morning Call."
Yardeni is president of his own research company, and he says there's a real possibility that the unemployment rate could sink to 3.5% over the next 12 months. He credits the growing economy, which was strong even in Q4 last year. As employers realize that 2007 is going to be strong, there will be a "hiring panic," he says.
"I think they're going to scramble to get anybody they can because they need people to expand [as the economy grows]," Yardeni says.