The Full Employment and Balanced Growth Act of 1978 gave the Fed a “dual mandate” – to promote maximum sustainable employment and stable prices. Over the years, the meaning of these two mandates has changed.

Initially, in 1978, it was to get the economy to 3% unemployment and 3% inflation, or less. Since then, the unemployment rate has never been as low as 3%. So, this morphed into a target of “full” employment – an economy where everyone who wants a job has a job. Because inflation remained below 3% for a long time, the Fed has reduced its target for inflation to 2%.

In recent years, under the leadership of Janet Yellen and Jerome Powell, the targets for employment have been the locus of change.

During the recovery from the 2008-09 Financial Panic, former Fed…