When the Federal Reserve’s vice chairman said in a 1994 speech that the central bank “had a role in reducing unemployment,” colleagues were publicly dismissive. The very word “employment” did not appear in a policy statement until 2008. The Fed was focused on inflation, officials said time and again.
That era is over. The signs have been there for some time, but they are now unmistakable. Ben S. Bernanke, the Fed’s chairman, made clear on Thursday that job creation is its primary concern for the foreseeable future.
The remarkable transformation of the Fed’s priorities is partly a response to the grim reality that more than 20 million Americans cannot find full-time jobs. It is made easier by the fact that the Fed has been so successful in stabilizing inflation right around the 2 percent annual pace that officials consider most healthy.
But as circumstances have changed, so has the Fed itself. Under the leadership of Mr. Bernanke — with considerable prodding and support from a board almost entirely appointed by President Obama — the central bank has gradually concluded that it has a responsibility to act more forcefully, and, equally important, that it has the ability to spur job creation directly.AP reports:
The number of Americans seeking unemployment benefits jumped to the highest level in two months, although the figures were skewed in part by Hurricane Isaac.
Applications increased by 15,000 to a seasonally adjusted 382,000, the Labor Department said Thursday. That's up from 367,000 the previous week. The four-week average, a less volatile measure, increased for the fourth straight week to 375,000.
Isaac made landfall as Category 1 hurricane on Aug. 28 in southeastern Louisiana and was later downgraded to a tropical storm. It disrupted work in nine states and boosted applications by roughly 9,000, Labor officials said.
Applications for unemployment benefits reflect the pace of layoffs.
...Overall, the news is not good. Bloomberg reports:
Jim O'Sullivan, chief U.S. economist at High Frequency Economics, said that after excluding the impact of the hurricane, applications are likely closer to 370,000. Still, the job market has shown little vigor this year.
Industrial production in the U.S. unexpectedly fell in August by the most since March 2009, highlighting risks to the economic outlook a day after the Federal Reserve boosted record stimulus.
The 1.2 percent decrease at factories, mines and utilities followed a revised 0.5 percent gain in the prior month, figures from the Fed showed today. The median estimate in a Bloomberg survey of 81 economists called for no change. Another report showed purchases cooled at retailers excluding auto dealers and gasoline service stations.
A global economic slowdown is restraining demand for U.S. exports, making it harder for companies like Texas Instruments Inc. (TXN) and Dow Chemical Co. (DOW) to expand sales. Manufacturers are also challenged by the prospect of budget cuts and tax increases set to take effect at the end of the year and consumer spending that’s hampered by 8 percent unemployment.