Does Poor Jobs Data Mean More Stimulus Spending?

Speaking at the Economic Club of New York on March 25, William Dudley, president and CEO of the New York Federal Reserve, provided a blunt — and seemingly prescient — assessment of labor market conditions.

“So how are we doing relative to our objective of a substantial improvement in the labor market outlook?” Dudley asked rhetorically in his speech, referring to the Fed’s decision to publicly tie monetary strategy to the unemployment rate.

Supplying an answer, he continued: “Since we provided additional stimulus in September there has been some improvement in labor market conditions. The unemployment rate is modestly lower and private non-farm payroll growth a bit higher than earlier in 2012, which is certainly welcome.”

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Specifically, non-farm payroll employment increased by an upwardly-revised 268,000 in February, well above the average rate of 197,000 for the past six months. This lowered the U-3 unemployment rate from 7.9 to 7.7 percent.

“However, other important indicators including the employment-to-population ratio and job-finding rates are essentially unchanged,” Dudley added. “This suggests that the labor market is far from healthy”…