Atlanta Federal Reserve President Dennis Lockhart suggested in a speech today in Chattanooga, Tennessee, that the Fed needs to look beyond the headline unemployment rate and additions to non-farm payrolls if the U.S. job market is going to recover. He noted that the U.S. is "in a bubble of uncertainty that is restraining the economy," specifically mentioning next week's election, the fiscal cliff, and the European financial crisis. In Lockhart's opinion, modest economic growth "with gradual employment gains" remains the "most plausible" forecast for the U.S. economy.

After reviewing the current state of employment, current monetary policy, and the complexity of the employment market, Lockhart said he would look for the evidence beyond the headline unemployment number and the payroll jobs number. The first signal he suggests watching out for is "lower unemployment rates that are driven by increased flows of job seekers into employment." Second, look for "growing public confidence in the labor market" increasing participation in the labor force. Third, he would "look for employment gains that are associated with reductions in unemployment," by which he means more full-time jobs are created and filled. Finally, he would look for signs that these indicators were gaining momentum and that they are sustainable.

Lockhart supports the FOMC decision to spend $40 billion a month on purchases of mortgage-backed securities until there is "substantial improvement" in the U.S. labor market. The asset purchases should produce the signals that Lockhart is looking for. At least that's the theory.

A copy of Lockhart's speech is available here.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Banking & Finance, Economy, Jobs Tagged: Atlanta Federal Reserve Bank President, Dennis Lockhart, featured, speeches

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Aurora Speedster

I would like to apologize for 3x post but I got POP-UP saying: Due to technical difficulties we can not display your comment. Try again later.

Wish you all the best,

November 01 2012 at 2:28 PM Report abuse rate up rate down Reply
Aurora Speedster

Hi guys. Some interesting ADP changes in the future:

1. The new report will increase the number of industries that report their payroll numbers each month from 3 to five. This will now include construction, financial activities, manufacturing, professional and business services, trade, transport and utilities. These five industries constitute 50% of all US non-farm private sector employment.

2. The sample size used to create the report has increased from 344,000 companies to 406,000 and from 21 million employees to 23 million employees – which are 20% of the private sector non-farm workforce.

3. It will also draw on revised historical payroll data collected by the BLS, and the business conditions sub-index of the monthly Philly Fed report, which has a close relationship with official payrolls data and takes account of initial jobless claims.

Trading news with

November 01 2012 at 2:24 PM Report abuse rate up rate down Reply