to 2 percent. turning to employment, in the years just prior to the pandemic, we saw the significant benefits to society that can come from a long period of strong labor market conditions : low unemployment, high participation, historically low racial employment gaps, and, with inflation low and stable, healthy real wage gains that were increasingly concentrated among those with lower incomes. 3 today, the labor market has cooled considerably from its formerly overheated state. the unemployment rate began to rise over a year ago and is now at 4. 3 percent — still low by historical standards, but almost a full percentage point above its level in early 2023 ( figure 2 ). most of that increase has come over the past six months. so far, rising shiller ( 1997 ) and stantcheva ( 2024 ) study why people dislike inflation. pfafjar and winkler study households ’ attitudes toward inflation and unemployment. binetti, nuzzi, and stantcheva investigate households ’ attitudes toward, and understanding of, inflation. kaplan and schulhofer - wohl ( 2017 ) and jaravel ( 2021 ) document heterogeneity in the inflation rate experienced by households across the income distribution. the data for the personal consumption expenditures ( pce ) price index is available for june 2024. over the 12 months to june 2024, the pce price index increased 2. 5 percent. data for the consumer price index and producer price index are available through july 2024 and can be used to estimate the level of the pce price index through july. while such an estimate is subject to uncertainty, it suggests that inflation remained near 2. 5 percent through july. research documenting such benefits include aaronson and others ( 2019 ), who discuss the experience in the 2010s and review related historical evidence. public unemployment has not been the result of elevated layoffs, as is typically the case in an economic downturn. rather, the increase mainly reflects a substantial increase in the supply of workers and a slowdown from the previously frantic pace of hiring. even so, the cooling in labor market conditions is unmistakable. job gains remain solid but have slowed this year. 4 job vacancies have fallen, and the ratio of vacancies to unemployment has returned to its pre - pandemic range. the hiring and quits rates are now below the levels that prevailed in 2018 and 2019. nominal wage gains have moderated. all told, labor market conditions are now less tight than just before

in manufacturing hubs in the southeast and in shanghai, where lockdowns had initially been scheduled to end in april 2022. the global nature of this inflationary episode is emphasized in cascaldi - garcia and others ( 2024 ) and clarida ( forthcoming ), among others. public remained well below pre - pandemic levels. there were nearly twice as many job openings as unemployed persons from march 2022 through the end of the year, signaling a severe labor shortage ( figure 6 ). 13 inflation peaked at 7. 1 percent in june 2022. at this podium two years ago, i discussed the possibility that addressing inflation could bring some pain in the form of higher unemployment and slower growth. some argued that getting inflation under control would require a recession and a lengthy period of high unemployment. 14 i expressed our unconditional commitment to fully restoring price stability and to keeping at it until the job is done. the fomc did not flinch from carrying out our responsibilities, and our actions forcefully demonstrated our commitment to restoring price stability. we raised our policy rate by 425 basis points in 2022 and another 100 basis points in 2023. we have held our policy rate at its current restrictive level since july 2023 ( figure 7 ). the summer of 2022 proved to be the peak of inflation. the 4 - 1 / 2 percentage point decline in inflation from its peak two years ago has occurred in a context of low unemployment — a welcome and historically unusual result. how did inflation fall without a sharp rise in unemployment above its estimated natural rate? pandemic - related distortions to supply and demand, as well as severe shocks to energy and commodity markets, were important drivers of high inflation, and their it has been argued that the natural rate of unemployment had risen, and that the unemployment rate was less informative about tightness in labor market than other measures such as those involving vacancies. for example, see crump and others ( 2024 ). more generally, research has emphasized that the unemployment rate and the ratio of vacancies to unemployment often provide similar signals, but the signals differed in the pandemic period, and the ratio of vacancies to unemployment is a better overall indicator. for example, see ball, leigh, and mishra ( 2022 ) and benigno and eggertsson ( 2023, 2024 ). for example, ball, leigh, and mishra ( 2022 ) and cecchetti and others (