This morning, we got unemployment numbers for December. All eyes are watching it, particularly at the Federal Reserve, which has said it will keep interest rates near zero until the unemployment rate hits 6.5 percent.

Unemployment has been declining pretty steadily for the last few years. It peaked near 10 percent in 2010, fell to 8 percent by 2013 and dropped to 7 percent in November. “The labor market’s gone from terrible to merely bad,” says Justin Wolfers, a fellow at the Brookings Institution. “It’s been a stop start recovery; it’s taken far too long, but now it looks like we may be seeing some momentum.” 

And momentum is exactly what the Federal Reserve is looking for.

“What we got in the last few months of 2013 is fairly good and steady job growth,” says Ken Goldstein, economist with Conference Board in New York. Goldstein expects we will hit 6.5 percent unemployment during the first half of 2014. That 6.5 percent point is the signal for the Federal Reserve to begin scaling back some of its extraordinary support for the economy.

Still, economist Justin Wolfers points out there are millions of long term unemployed who are not showing up in these numbers. Many have dropped out of the labor force or given up. He says the economic impact of that population is something the Fed needs to watch as it sets policy in 2014.