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Gus Faucher, senior macroeconomist at PNC Financial Services Group, weighs in on August jobs data and the potential for the Federal Reserve to take ac...
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The Fed to act next week that's bringing -- O'Shea PNC Financial Services Group DP and senior macro at the economist.
-- Serbian -- us you know.
Two things that bothered me in -- service jobs reporter.
Were hourly earnings down one cent not a lot but down last month.
And temporary help which typically should be up in the summer kids -- -- temporarily.
That was down to so many of the economy.
Is not improving is that.
Well the economy is adding jobs there's no question about that but job growth -- below what we need to keep up with an expanding.
Labor force.
And so we -- we see the unemployment rate you know basically holding steady at a little bit above 8%.
But you have 368000.
People that said -- last.
I tried I tried I tried there's not been out there I'd rather sit home and collect checks.
Well yeah you we did see -- big drop in a labor force that's disconcerting no question about that.
Mean -- unemployment rate fell in August but that's because we had a lot of people dropping out of the labor force.
And we actually had a decline in the number of people in the household survey which is a separate survey from payroll survey.
So we had a drop in employment there and that's worrisome as well.
-- -- June revised down only 45000 jobs created and it really interesting stat is that.
In June 45000 jobs -- -- created and yet 174000.
People were added to the food stamp program.
So I think it seems we're going in the wrong direction coming into this election not.
Well the economy is -- fewer jobs than what we'd like to see typically need about a hundred -- 145000.
Jobs per month to keep up with growth in the labor force.
And we've been below that we've added fewer than.
100000 jobs and for the last five months and that's obviously -- chairman Bernanke is concerned about and -- he talked about last week in Jackson Hole.
OK so let's talk about -- and more liquidity being put into the market that's it everyone wants known -- at least -- traders on Wall Street want enough they're gonna get more more liquidity.
You say -- is now what about a 50% chance of it.
That's right I think for sure the Fed will announce that they are going to extend the period where they're gonna keep the Fed Funds rate.
I close to zero through the end of fifth 2015.
Right now they say they're gonna keep it there through the end of 2014.
And then I think the odds are about 5050 that -- another -- announce another round of quantitative easing.
You know it's it's a big step -- chairman Bernanke said last week that he thinks -- at this point the benefits outweigh the costs.
-- made it clear that he's very concerned about the state of the labor market.
But do they really I mean -- -- we've seen that with each one of the quantitative easing as we recently received the return on it has been diminished.
We need demand to be increases that people wanna go out and buy some stuff and that money we'll never make it down to that.
Level.
I don't think that that's true I think we're seeing a turnaround in the housing market for example and that's in part because of very low mortgage rates that the Fed his.
Reduced through quantitative easing I think there's room for mortgage rates to come down further the spread between mortgage rates in treasuries.
Is that he is above its long term average so I think that if there's QE and particularly if it's targeted towards the mortgage market.
There's the potential there for some of -- to the housing market which would really help with growth.
I don't know I worry about are the value of our dollar and that tax is my children have to pay to pay all this back -- day -- bush day of PNC Financial Services Group.
Thanks for being here on this -- -- Thank you.
