Sept. jobs report: Will Fed now act to boost economy?
By Neil Irwin
The September jobs report was decidedly mediocre, with sluggish growth on private payrolls, steep declines in public payrolls, and an unemployment rate that is treading water.
So what does it all mean for Federal Reserve policy?
The simple answer is that there is now every reason to expect the Fed to announce new steps to try to bolster the economy at its policy meeting early next month.
Fed policy moves are never a done deal until they are announced, and there are lots of open questions around the exact approach the Fed will use to ease monetary policy further (though it will involve purchasing massive quantities of bonds). But with unemployment stuck at high levels and inflation coming in below the levels the Fed aims for, the train would seem to be leaving the station on new easing.
"Over the past five months, the private sector looks to have settled into a trend of weak job creation," said J.P. Morgan Chase economist Michael Feroli. "if the mentality becomes entrenched that employment numbers like today's are the norm, then an attitude of permanent malaise could enter into economic behavior. This is an outcome we believe the Fed would find unacceptable. For that reason, we see today's employment report as only furthering the case for more asset purchase by the Fed."
The top two Fed officials will have opportunities to clarify this question next week. Janet Yellen is to deliver her first speech as the board's vice chairwoman Monday, and Chairman Ben S. Bernanke is scheduled to speak on monetary policy on Friday.
| October 8, 2010; 1:45 PM ET
Categories: Federal Reserve, U.S. Economy, Unemployment
Save & Share: Previous: Reid calls on lenders to halt foreclosures in all 50 states
Next: 20 years after Berlin Walls falls, Eastern Europe has yet to catch up with world economies
Posted by: boston61 | October 8, 2010 3:00 PM | Report abuse
Posted by: Anonymous | October 8, 2010 4:35 PM | Report abuse
Posted by: ceo_nick | October 8, 2010 5:09 PM | Report abuse
Posted by: boston61 | October 8, 2010 5:23 PM | Report abuse
Posted by: Anonymous | October 9, 2010 11:33 AM | Report abuse