Fed Seen As Likely To Keep Rates Low -- Lack of New Jobs Reflect Uneven Gr

[radfringe]

Fed Seen As Likely To Keep Rates Low
Greenspan's Remarks On Lack of New Jobs Reflect Uneven Growth
http://www.washingtonpost.com/wp-dyn/articles/A54772-2004Mar12.html
By Nell Henderson
Washington Post Staff Write
Saturday, March 13, 2004; Page E01


Federal Reserve policymakers are almost certain to keep interest rates near rock-bottom lows when they meet Tuesday, and for many months to come, because of the continuing unevenness of the U.S. economic expansion, many investors and analysts have concluded.

The economy has sent a series of mixed messages since Fed officials last met in late January, with several businesses enjoying rising sales and profits, but without hiring significant numbers of new workers.

Fed Chairman Alan Greenspan told Congress Thursday, "As our economy exhibits increasing signals of recovery, job loss continues to diminish. But new job creation is lagging badly."

And while he predicted that, "In all likelihood, employment will begin to increase more quickly before long as output continues to expand," he went on to endorse extending unemployment benefits for those who have exhausted them after six months.


---snip---

The statement did note that some "indicators suggest an improvement in the labor market," but the slack has only grown since then -- raising the possibility that Fed officials might alter their language on employment in the statement they issue after their Tuesday meeting.

Nearly 400,000 people stopped looking for work last month, and the average length of unemployment grew to 20.3 weeks in February -- the highest in more than 20 years -- from 19.8 weeks the month before, the Labor Department reported a week ago.


The rate of participation in the labor force fell last month to 65.9 percent -- the lowest rate in more than 15 years -- from 66.1 percent the month before. And the share of the total population with jobs, a figure some Fed officials have cited as a measure of slack, slipped to 62.2 percent last month from 62.4 percent.

U.S. job creation essentially stalled over the past three months, with payrolls rising each month by amounts so small that labor economists call them "statistically insignificant."