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On Wednesday, the Fed moved the goalposts on the labor market.
Along with its latest monetary policy decision, the Fed released its latest outlook for the unemployment rate, GDP growth, and interest rates.
The unemployment rate outlook showed that the Fed still sees "slack" in the labor market, as it lowered the unemployment rate at which it would consider the economy to have reached "full employment" to 5.2% from 5.5%.
"Full employment" is also called NAIRU, or the non-accelerating inflation rate of unemployment, the employment level below which inflation beings to accelerate. "Slack" is basically how much room the labor market needs to further improve until it hits this range.
Earlier on Thursday, we wrote about how developments in the labor market over the last several months make clear this gap could close faster than markets might expect.
Via Nomura, here's a look at the gap the unemployment rate must close until we once again see economists declaring that we've reached "full employment."
Nomura