The fed is trying to raise unemployment, not lower it, and the real metric tracked is the unemployment rate, which is not affected by your comment.
No, the Fed is trying to lower aggregate consumer demand to rein in the growth in consumer prices. If it could acheive that entirely by adversely impacting availability and cost of credit while unemployment kept dropping, that would be ideal, given the other side of its dual mandate.
It accepts as a natural consequence that unemployment will likely need to go up to acheive its goals on inflation, but raising unemployment is not a goal.
It would be ideal. But it is not achievable. So raising unemployment is a short term goal to achieve the broader goal of stability.
There is a difference between an accepted cost and a goal.
They are absolutely not “trying to raise unemployment”. They are trying to control inflation and the expectation is that they will eventually have to stop raising interest rates (or lower them) because unemployment increases too much before they hit their inflation target.
Their main lever is interest rates. Interest rate increases do not necessarily increase unemployment. Now that unemployment is low enough, their priority is inflation, and for that they will raise interest rates. If higher unemployment is a side effect that leads to 2% inflation, then their mandate is still achieved. But rest assured, if inflation comes down to 2% with unemployment flat or improved, it's all the better according to them. Their intention is not "more unemployment -> less inflation", it's just "less inflation," by any means necessary. They will accept causing higher unemployment to achieve 2% inflation because it's a balancing act between their two goals.
"Powell said he hoped that a slackening of demand might reduce pressure in the labor market without raising unemployment."[0]
[0]https://www.bloomberg.com/opinion/articles/2022-07-29/higher...
The critical difference that you are missing is that if inflation stops before employment declines, they will stop raising rates.
How long will they need to hold interest rates at 5%+ before we see a raise in unemployment?
The Fed rate doesn't directly affect employment - at best it may encourage some larger businesses to postpone hiring, but most companies (outside tech, which a.) has some very good macroeconomists b.) intends to survive and c.) is unusually sensitive to cost of capital) aren't going to lay off people until their bottom line takes a hit that puts their survival in question. Smaller profitable companies aren't directly exposed to the cost of capital at all, because they fund operations out of cash flow.
The way interest hikes combat inflation is that they make certain lines of business unprofitable, which makes companies either voluntarily shutter them or go out of business for being unprofitable, which frees up the workers involved in those businesses to compete for core, need-to-have industries like food and logistics, which holds down wages. This is happening in tech, but it hasn't filtered down into the broader economy. And it needs to - even if you lay off everyone who "learned to code" in the last 10 years and force them back to working retail, there are still way more job openings than workers.
We'll see unemployment go up when we see major Fortune 500 companies go bankrupt, and we'll see inflation drop sustainably when people are on bread lines.
The money injected into the system was created 2, 3, and 4 years ago. It takes a few years for the effects of multi million dollar financing to show.
Lots of companies still filling back orders and latent demand from the last three years
When unemployment is low companies are reluctant to lose staff for fear of not being able to rehire when needed
The housing market hasn’t slowed much which is a huge employer
Pent up demand for travel and services is still strong
It's going to be really tough to do that if they can't create some unemployment over here.
The US’ economy is not as capital intensive as other economies past.
I don't know. New + used car sales as well as new 15/30 year mortgages (or what would typically be refinances maybe) have to have some effect.
A car salesman closes less deals, he has less money to go on vacation with, etc. etc.
Prepare to be disappointed. They are openly trying to raise it in order to lower "inflation".