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RBS Economist Michelle Girard on the August jobs report and whether it will lead the Federal Reserve to take further action.
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Thousand jobs were added in August and what's more the labor participation rate fell to its lowest level since September -- 1881.
Wow I didn't realize it was.
That -- next guest says.
These numbers won't let Fed Chairman Ben Bernanke's great concern over the labor markets -- is QE3 around the corner joining us now it hurts me.
Is Michelle Girard senior economist at RBS Michelle thank you so much for joining us today we'd love it when you come on the show.
-- talk jobs with us.
They're heading may not Citi this report it wasn't good one might -- it we we're all waiting to see what these numbers would -- adequately within going into its think that fed policy turns out one particular number but it felt like that today.
And this report I think.
Didn't deliver in this sense that it wasn't strong enough I -- to keep the fat from from undertaking QE3 -- they.
Out and the minutes from their last meeting.
They said they were really inclined to act unless the economies of -- sustainably and substantially improved and these numbers.
Didn't show that it so I think on them fed meets next week we are gonna -- action.
There were a lot of people -- that up that they wouldn't act before the election because it does signal that things are pretty bad -- you.
You see you don't agree without it.
Isn't quite a lot in order to close to the election -- October meeting with feel too close but.
Think that out and politics enter into the Fed's decision making at all and in I've heard.
I've heard some people say the Fed went door really like to take the opportunity to make that point very clear to the markets that they.
We'll do what they need to do it doesn't matter about politics it doesn't matter about the elections -- potential backlash from the Republicans.
If they think the economy needs support they're going to act.
So many other questions to follow up with you Michel -- here.
What really struck me outside of the initial numbers in the dropout rate analysts was the fact that July was revised downward and June had -- steep downward revision so.
How reliable are these numbers from the government and is there any political spin to glean from that act like you're right and learned that you know we had -- -- -- On top of that disappointed August number -- over the last three months.
We only see job growth of 94000.
That's in the the Fed Chairman himself says you need at the 100000.
To just keep the unemployment rate steady we're not even.
Making that -- market actually a lot of people think it should be little bit higher than that.
On so I think what we're seeing is really that ongoing stagnation in the labor market.
I still think it's really -- uncertainty that's behind -- you know -- A couple of days with -- Seen some evidence that hiring plans going full word.
Have picked up a bit I what's happening is is that nobody wants to higher now because there's so much uncertainty but -- falling behind it is they actually could you the high here.
A couple more workers at least but there waving.
I think they're planning to do so if we can come out of this year -- fiscal cliff.
-- without the economy -- so are you looking Michelle at the productivity numbers I mean how much.
Labor king -- -- -- company realistically squeeze out of the worker at this point way to enforce the remaining flat well that's exactly -- I mean they've really been using.
Productivity in order to increase happening -- economy isn't growing so fast that companies have to be beefing up their work forces significantly but it is growing -- not.
On and we had systematic cost cuts that isn't in the downturn that I do think on the margin as long as we continue to looks had.
You do need to -- -- some out adding to staff I think that's -- actually not happening.
Public sufficiently now -- -- -- some pent up demand.
On the -- for future employment at the bottom line is right now there's just no comments have for the economy or the labor market and I think wouldn't come back to the Fed.
That's gonna be the trigger for them to want to do to write more support.
I just closeout here -- Michelle Ben Bernanke Jackson holds that you know structural unemployment can be fixed he's optimistic about that so.
Are you as well.
Yet really key this -- -- -- the at a plant rates so high is -- structural I mean even if the economy was going better would still be high scores at cyclical something's picked up -- -- -- -- -- found it.
He's sided with the latter case he thinks it's cyclical.
Which is important because that means that the Fed takes action to get the economy going -- strongly it will bring the unemployment rate out.
And I think yet again is a cornerstone of his view which is why.
He does think it makes sense for the Fed to do more to get this economy going and help to bring that jobless rate down.
Michelle Girard always brilliant thank you so much -- might indeed you are.
