Fed officials warn weak recovery won’t spur jobs

Filed under: Daily News | Tags:,

WASHINGTON (AP) — Unemployment likely will remain high for the next several years because the economic recovery won’t be strong enough to spur robust hiring, Federal Reserve officials warned Tuesday.

The cautionary note struck by the presidents of regional Fed banks in San Francisco and Atlanta were the first public remarks of Fed officials since the government reported last week that the nation’s jobless rate bolted to 10.2 percent in October. It marked only the second time in the post-World War II period that the rate surpassed 10 percent.

In separate speeches, Janet Yellen, president of the Federal Reserve Bank of San Francisco, and Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, warned that rising unemployment could crimp consumers, restraining the recovery. Consumer spending accounts for about 70 percent of economic activity.

“With such a slow rebound, unemployment could well stay high for several years to come,” Yellen said. “In other words, our recovery is likely to feel like something well short of good times.”

Yellen envisions the shape of the recovery kind of like an “L” with a gradual upward tilt of the base.

Lockhart said “very slow net job gains” may occur “sometime next year.”

Troubles in the commercial real estate market and the plight of small businesses also will weigh on the recovery, they said.

Small businesses — which held up reasonably well in the 2001 recession — have been clobbered by the downturn, accounting for about 45 percent of net job losses through the end of 2008, Lockhart said. During the last two economic recoveries, small businesses contributed about one-third of net job growth. Lockhart said he doubted that would be the case this time.

That’s because many small businesses rely on smaller banks for credit. But troubled commercial real estate loans are concentrated at those banks, hobbling the flow of credit. Lockhart said he is “particularly concerned” about that linkage.

Meanwhile, Eric Rosengren, president of the Federal Reserve Bank of Boston, weighed in on a different hot-button issue for Congress: how best to handle huge financial companies whose failure could endanger the economy.

Rosengren endorsed “living wills” that outline wind-down arrangements in the event of failure, rather than having the government restrict the size or activities of financial firms. “I am skeptical such dramatic action would significantly limit systemic risk,” he said in a speech in London.

The Obama administration has called on Congress to set up a mechanism to safely dismantle failed financial companies — along the lines of what the Federal Deposit Insurance Corp. does for collapsed banks. Although key legislative proposals revamping the nation’s financial rules contain such a provision, some lawmakers and others have expressed interest in limiting the size of colossal firms or breaking them up if they get too big.

One Response to Fed officials warn weak recovery won’t spur jobs

  1. We need to get back to basic economics, and change the key word “change” how we do business at the political level. Politics are not working we all know this. We have to get the economic engine running now!!!!!!! Or you have no job creation!!!!!!!

    We have to have term limits with the requirements that all senators and congressman have to have economics, ran a business, made payroll, and dealt with corporate taxes. They have to have walked the walk, to talk the talk, and know how to run a business…and create job’s !!!!!!!!!!! Not one government biz or process has been profitable. Not one !!! And our government has the audacity to say that the banks were fiscally irresponsible. The joke is on us the American people!!!!!!

    We have to stop manufacturing all our goods over seas. Make all manufactured goods on our soil and you create jobs. We haven’t built a manufacturing plant in Colorado Springs for years it’s all over seas. Building it here means new jobs, new real estate deals, and tax revenue to bail out broke cities and counties.

    We need a think tank of business men and women from all sectors of the economy, and our elite military leaders. Include some of the most brilliant economists. Select the best, put them in a closed door session, have them come up with 10 immediate solutions to restart the economy and create jobs. This think tank would be by-partisan and would be the advisory to the House and Senate as well as local governments. Give them 30 more days to over haul the tax code (IRS) and give us a flat tax as we are all equals. Have this think tank come up with health care reform and tort reform and they will make it work and cost less. Give this think tank a directive to pay back the deficit and they will make it happen. Use this process in your local communities like Colorado Springs and you will make this city profitable again. Mayors and council men need outside economic think tanks as advisors, who have the best interest of city and the businesses, not politics and you can re-create the city with economics and fresh business ideas.

    We need immediate tax deduction and tax saving for small business . We need confidence in our tax plan not uncertainty. Not more government and hidden taxes. Once giving businesses the tools for growth, you will create jobs.

    We need to get off the health care issues for now and refocus on the problem at hand Job growth.

    We need to build new gas refineries unleash the oil companies but tax them and get more supply and re-duce our gallon of gas down to .75 cents per gallon, and then tax it 75 cents or something to help fund roads and pay back the national debt . Oil / drilling creates jobs. We are the cleanest oil producer in the world we have the resources let’s use them and put our people to work, not our enemies.

    We need to get the waste out of our government by privatizing all the fed, state, county, city departments. Appoint the same think tank with private companies managing for profit all the wasted tax dollars.

    We need the banks lending again. Get the federal regulators to soften the blow on the loans that are maturing.
    Help small business with work outs and their business lines. Have the SBA loan 3.75 % loan fixed for 30 years to fist time commercial real-estate buyers that buy buildings for their business, give them tax breaks for purchasing give 30 years to re-pay which will stabilize the real estate market. We need the small business engine running again.

    No loans… no growth… no jobs!!!!!!!!!!!!!!!!!!!!!!! Can you say 20% unemployment and depression?

    America years ago let the blue collar jobs go over sea’s in the last 5 years we have let the white collar jobs go over sea’s called BTO (Business transformation out sourcing) call centers, billing , software designers , software engineer’s , service centers We need to penalize the businesses that do this, bring those jobs back to our soil. Create jobs and you create wealth and investment in our economy.

    We have the greatest military in the world it should be run like a business. You need help, you need to pay our tanks, our soldiers are a business we bill by the hour and bullet. The profit will pay for the fallen soldier funds, for their spouses, and their children we owe it to them for keeping us free. We owe nothing to those you who try to kill us. We owe it to us, the American tax payer, to get a return on the blood we leave on other soils.

    Steve Hammers
    November 10, 2009 at 3:16 pm