Conditions in the labor market gradually improved. Employment increased at an average monthly pace of 175,000 in the second half of the year, about the same as in the first half. The unemployment rate moved down from 8-1/4 percent last summer to a little below 8 percent in January. Even so, the unemployment rate was still well above levels observed prior to the recent recession. Moreover, it remained the case that a large share of the unemployed had been out of work for more than six months, and that a significant portion of the employed had part-time jobs because they were unable to find full-time employment. Meanwhile, consumer price inflation remained subdued amid stable long-term inflation expectations and persistent slack in labor markets. Over the second half of the year, the price index for personal consumption expenditures increased at an annual rate of 1-1/2 percent.