Tag Archives: Bloomberg

Barkin: U.S. challenge is finding jobs for ‘last 5%’ displaced by crisis – BBG

WASHINGTON (Reuters) – The U.S.’s top economic challenge now is bringing unemployed workers back to jobs as those displaced from hard-hit industries like food service may find their “classic next job” has also disappeared, Richmond Federal Reserve bank president Thomas Barkin said on Wednesday.

“Where I see the real challenge now is getting the last 5% of Americans back into the workforce,” Barkin said in an interview on Bloomberg television, referring to the current 8.4% unemployment rate that is about 5 percentage points above the record low of last year.

That could be tough, Barkin said, because “we know a lot of people used to be waiters or work at an amusement park…Their classic next job would have been at a retailer or working at another restaurant. If those places are not hiring how do we get them redeployed?”

The U.S. is currently about 11 million jobs shy of where it was in February. Monthly job growth has been strong since the pandemic led to a massive round of layoffs, and a jobs report Friday is expected to show several hundred thousand positions were added in September. Private payroll processor ADP’s data on Wednesday estimated the number at 749,000.

That would still represent a slowing over recent months, and economists at the Fed and elsewhere worry it may take years to reclaim lost ground in the labor market.

Concerns about persistent damage to the employment prospects particularly for younger or less skilled workers has been growing as the pandemic slump continues, and companies begin retooling for a smaller future workforce.

Disney on Tuesday announced it was laying off 28,000 workers as coronavirus-related restrictions on its theme parks lengthened through the summer and into the fall.

Though most are part-time jobs it was an example of the dynamic Barkin described, eliminating positions that could serve as flexible or entry level work for people who will now need to look elsewhere in an economy where many industries and occupations open to less skilled employees may have to cut back.

“Issues of job retraining, issues of getting (education) grants…Those are the kind of things that are important if we are going to bring the economy all the way back,” Barkin said.

(Reporting by Howard Schneider; Editing by Chizu Nomiyama)

Fed officials tussle over practical meaning of new inflation policy

By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) – Federal Reserve policymakers on Friday began fleshing out what their new tolerance for inflation will mean in practice, an issue critical to how investors and households reshape their own outlooks even if it may not be relevant to any immediate decisions by the U.S. central bank.

The new policy, laid out in a strategic document last month and incorporated into a policy statement issued on Wednesday, pledges to keep interest rates near zero until inflation has hit the Fed’s 2% target and is on track “to moderately exceed” it “for some time.”

As it stands, with the coronavirus pandemic sapping demand, leaving millions of Americans unemployed, and threatening the survival of entire industries, inflation is not seen as the core risk. Economic projections released by the Fed this week show inflation only reaching 2% by the end of 2023, with any shift towards tighter monetary policy likely years down the road.

But how the Fed’s new language is interpreted by the central bank’s five current Washington-based governors and 12 regional bank presidents will be central to whether bond markets, stock investors and even consumers see the new approach as likely to be effective, and start behaving in a way that actually helps push inflation higher.

After years of weak inflation, that is the Fed’s hope. It is based on fears of a Japanese-style low inflation rut that can have its own damaging effects over time, and Fed officials on Friday started to outline their views of how to proceed.

Atlanta Fed President Raphael Bostic said, for example, that he’d be paying closer attention to how fast inflation rises rather than to its quarter-to-quarter level in implementing the new approach.

In an interview on Bloomberg Television, Bostic said if inflation went up to 2.3% but appeared stable “that would be fine … By contrast if we were at 2.2 and the next quarter at 2.4 and then at 2.6, that trajectory would give me concern” and perhaps require efforts to cool the economy.

‘GHOST STORIES’

Minneapolis Fed President Neel Kashkari, in contrast, laid out a more open-ended view in written comments describing why he dissented against the rate-setting Federal Open Market Committee’s policy statement on Wednesday.

The Fed, he felt, was setting itself up to make the same mistake it has in the past of reacting too quickly to inflation “ghost stories” and risked nipping off job growth too soon.

He said the Fed instead should switch its focus to core inflation, a slower moving variable that excludes volatile commodity prices, and ensure that it reached 2% on a “sustained basis.”

“I would have preferred the Committee make a stronger commitment to not raising rates until we were certain to have achieved our dual mandate objectives,” of maximum employment consistent with stable prices, Kashkari said in an essay.

A second dissent from Dallas Fed President Robert Kaplan argued the central bank should keep its options open to raise rates sooner if needed – a sign of the broad debate now taking place over just what the new framework will mean in practice.

Critics say they feel the Fed’s new approach rings hollow without strong measures to back it up and produce the higher inflation they seek, such as more aggressive bond-buying.

But St. Louis Fed President James Bullard said inflation may move higher on its own if, as he suspects, the economic recovery gains traction at a time when global supply chains are being reorganized, monetary policy is loose, and governments are issuing record levels of debt to finance pandemic-related spending.

“A lot of people on Wall Street are saying ‘you could not hit 2%, how are you going to have inflation above 2%?,'” Bullard said in webcast remarks to a Washington University in St. Louis forum.

“I think we are at a moment where you may see some inflation … You have got more relaxed central banks … You have got huge fiscal deficits which historically have been a catalyst for inflation. And you have possibly bottleneck-type pressures.”

(Reporting by Howard Schneider and Ann Saphir; Editing by Paul Simao)

Bloomberg: Trump and Netanyahu Discuss Border Fence, Status of Jerusalem

By Ben Brody

Donald Trump “discussed at length Israel’s successful experience with a security fence that helped secure its borders” during a meeting with Prime Minister Benjamin Netanyahu that lasted longer than an hour, according to a statement from the Republican presidential nominee’s campaign.

Trump’s proposal to build a wall on the U.S. border with Mexico as way to confront illegal immigration has become a cornerstone of his campaign, although the statement did not say whether he drew direct parallels with Israel’s border fence, which is meant to combat terrorism.

The real estate investor also “acknowledged that Jerusalem has been the eternal capital of the Jewish People for over 3000 years, and that the United States, under a Trump administration, will finally accept the long-standing Congressional mandate to recognize Jerusalem as the undivided capital of the State of Israel,” his campaign said after Sunday’s meeting.

Read the full article at Bloomberg.com