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.
TEXT SIZE - +
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

'Exceptionally Lucky' US Boy Survives Flight in Wheel Well

The boy was unconscious for most of the flight, and appeared to be unharmed after enduring the extremely cold temperatures and lack of oxygen More

US Anti-Corruption Law Snags Major Tech Company

The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter in December, 1977 More

Cameron Criticized for Calling UK 'Christian Country'

Letter from scientists, academics and writers says the prime minister is fostering division by repeatedly referring to England as a 'Christian country' 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.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid