Unemployment in the US

How long will it take for unemployment in the US to hit 6.5%? Well, with more and more graduates being churned out every year and fewer jobs in the market, this situation could take years. Why is the 6.5% benchmark important? When the jobless rate reaches this magical figure, from the current level of 7.8%, the Federal Reserve will start raising interest rates. Currently interest rates in the economy are hovering at benign levels of 0-0.25%.

The only thing that can reduce the unemployment rate is growth. But, the American economy has growth only at around 2% over the last several years. If growth suddenly sees a spurt and another recession is avoided, the jobless rate could hit 6.5% over the next few years. The average Fed forecast is for unemployment to drop to 6.3% in 2015. But, is this sustainable? The fiscal cliff has been avoided for now, but with the debt ceiling deadline looming, we wonder for how long this economy can survive on pumped up steroids.