News / USA

Weak US Employment Report Could Force Central Bank Action

People wait in line to meet with job counselor during a job fair at Workforce1 in New York, September 6, 2012.
People wait in line to meet with job counselor during a job fair at Workforce1 in New York, September 6, 2012.
VOA News
U.S. business analysts say that Friday's weak employment report could push the country's central bank to adopt new measures next week to spur job growth and boost the sluggish economy.

The government reported that the American labor market added only 96,000 new jobs in August.  While the jobless rate fell from 8.3 percent to 8.1 percent, that was largely because thousands of unemployed workers abandoned their search for a job.  As a result, they were not counted as part of the labor force and the declining unemployment rate.

Economist Steve Fazzari at Washington University in St. Louis said the meager job growth coupled with the reason for the declining jobless rate make it more likely the Federal Reserve will act to cut key long-term interest rates, which already are very low.

"With this relatively weak report, and I think that’s the way it's going to be interpreted, it makes it even more likely that the Fed will take some actions to lower long-term interest rates even further," said Fazzari.

Job growth has become a key point of contention in the close presidential election campaign between the Democratic incumbent, President Barack Obama, and his Republican challenger, Mitt Romney.  Fazzari said the lack of significant job growth is troubling.

"We're still stagnating," he said. "We're not creating enough jobs in the economy to even keep up with population growth.  So, yes, we are growing, rather than shrinking.  So that's a positive and that's certainly what the Obama campaign's going to emphasize.  But we're not really doing any kind of catch-up.  We lost so many jobs in 2008 and 2009, and we're just rumbling along the bottom, as far I'm concerned."

Another analyst, finance professor Rebel Cole at DePaul University in Chicago, emphasized that the drop in the unemployment rate is misleading.

"Unfortunately, most people are going to focus on the drop in the unemployment rate from 8.3 percent to 8.1 percent," said Cole. "And that’s unfortunate, because it’s badly misleading.  The unemployment rate fell because over 350,000 people dropped out of the labor force.  In other words, the situation is so bad that workers are simply giving up and leaving the labor force.  Since last year at this time, about 2.7 million workers have lost faith and left the labor force.  So that has masked the true unemployment rate, which would be closer to double digits were those people still counted."

Cole said he is not sure that the Federal Reserve will adopt new policies next week, but said that with the poor employment report, the "probability just went way up."

Cole said the central bank has signaled that it might purchase mortgage-backed securities in an attempt to cut already-low interest rates on home purchase loans.  But Cole said he does not see the connection between housing loan interest rates and the creation of more jobs.

"The problem with that is that I don't think that mortgage rates are too high," he said. "I don't see how that's really going to help the job market.  Most people who can refinance have refinanced."

You May Like

Ukraine Purges Interior Ministry Leadership With Pro-Russian Ties

Interior Minister Avakov says 91 people 'in positions of leadership' have been fired, including 8 generals found to have links to past pro-Moscow governments More

US Airlines Point to Additional Problems of any Ebola Travel Ban

Airline officials note that even under travel ban, they may not be able to determine where passenger set out from, as there are no direct flights from Liberia, Guinea or Sierra Leone More

Nigerian President to Seek Another Term

Goodluck Jonathan has faced intense criticism for failing to stop Boko Haram militants More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid