Federal Reserve Is Nervous : Economy Still Declining

First, the unemployment rate is not 5.1% - that's the number that the White House wants to use to show how great Mr Obama is doing domestic economy. What a hoot - with 94 million people unemployed and a labor participation rate lower then it was in 1977, little wonder the Federal Reserve is stuck on zero. Some experts say the rate hasn't been this bad since 1948.

Think about this, the U6 unemployment rate is the rate that includes those who have given up looking for work which now sets at more the 13%. The White House is unconcerned. Why?

Of course I'm sure the White House made the phone call telling the feds' Yellen to keep the rate at zero or close to it so he looks good for the rest of Obama term and driving million into dependency which equates to more democrat voters.

After that the fed can raise the rate, especially if a Republicans wins the White House, driving the stock market and the economy into the ditch deeper then it is now, and then Mr Obama can go on the main stream news outlets saying 'see what happens when Republicans are in control?'

This will be the narrative for the next four or eight years. They did it to GWB and they will do it again. The attacks will begin January 21st, 2017 and will be relentless.

What Spooked the Fed?
Source: Bob McTeer, "Did The Weak September Jobs Report Derail a 2015 Rate Hike?" Forbes, October 3, 2015.

October 7, 2015

Before the September employment report, I thought there was a good chance that the federal open market committee (FOMC) would lift off at its next meeting on October 27-28. With no new employment report due before then and with a weak advance GDP report for the 3rd quarter expected on October 29, that seems impossible now.

Furthermore, December 15-16 also seems much less likely since there will be only one new employment report due before then, says distinguished fellow Bob McTeer of the National Center for Policy Analysis. The unemployment rate held steady at 5.1% in September, but by now everyone understands that this low number is enabled by a low and still falling labor force participation rate.

The civilian labor force participation rate dropped to 62.4% with 350,000 leaving the labor force in September, This drop market the lowest labor force participation rate since 1977. Another sign of weakness in September was a small drop in the average workweek and flat earnings. The average for all employees on private nonfarm payrolls declined by 0.1 hour to 34.5 hours while the manufacturing workweek declined by 0.2 hour to 40.6 hours. Overtime declined by 0.2 hour to 3.1 hours.

Average hourly earnings for all employees on private nonfarm payrolls declined by a penny to $25.09 after rising 9 cents in August. Some have argued that this weak report vindicates the FOMC's non action in September. Maybe so, but one could also argue that they missed an opportunity they should have taken even if these numbers were pending. As they say in Texas, you can argue it round and you can argue it square.