Evans adds new demands in order to cut stimulus


The falling unemployment rate is not necessarily indicative of a strong jobs market because it's been accompanied by a "dramatic" fall in the labor force participation rate, Chicago Fed boss Charles Evans tells an audience. Therefore, he would need to see not just unemployment at 6.5%, but an accompanying rise in labor force participation and solid increases in GDP growth before he would be comfortable dialing back stimulus. Is he outlining the beginning of NGDP targeting by the Fed?

"Only the data can tell us how much progress we’ve made, and they aren’t saying much right now."

Comments (19)
  • tunaman4u2
    , contributor
    Comments (3489) | Send Message
     
    Changing the goal posts so its impossible to hit so the fed can justify PERMANENT & GROWING QE.

     

    Well played, predictably played... and the outcome is also predictable.
    17 Oct 2013, 01:17 PM Reply Like
  • Klaus Müller
    , contributor
    Comments (7) | Send Message
     
    I agree 100%. The outcome is predictable!
    17 Oct 2013, 10:45 PM Reply Like
  • mcostigane
    , contributor
    Comments (44) | Send Message
     
    in the words of Buzz Lightyear........to infinity and beyond!!
    17 Oct 2013, 01:19 PM Reply Like
  • mobyss
    , contributor
    Comments (2614) | Send Message
     
    Centrally planned economy, here we come.
    17 Oct 2013, 01:19 PM Reply Like
  • bbro
    , contributor
    Comments (11227) | Send Message
     
    4% nominal GDP growth generates around 2.3 to 2.5 million job growth...each additional 1% is about another 1.2 to 1.4 million jobs...using a baseline of 2%
    productivity growth
    17 Oct 2013, 01:30 PM Reply Like
  • Jason Burack
    , contributor
    Comments (2150) | Send Message
     
    Actually it won't. Obamacare guarantees very little full time jobs will be created in the US outside of shale oil jobs, some manufacturing jobs and some technology jobs. They will not offset all the full timers about to become part timers due to Obamacare.
    17 Oct 2013, 05:44 PM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2957) | Send Message
     
    What an idiot. QExxxx hasn't helped one bit, but since he can't figure out why, we may as well just keep doing it.

     

    How about letting short term rates rise, allowing thrifty retired/semi retired baby boomers earn a decent return on their savings, and destroying those who bankrupted our economy a few years ago?
    17 Oct 2013, 01:37 PM Reply Like
  • june1234
    , contributor
    Comments (4418) | Send Message
     
    If you want a job in a country with a growing labor participation rate learn Mandarin and move to China; in meantime keep borrowing keep printing.
    17 Oct 2013, 01:41 PM Reply Like
  • bbro
    , contributor
    Comments (11227) | Send Message
     
    GJ....do you realize the banks are overflowing with deposits they don't
    need deposits ( and therefore don't need to pay up)...Savings deposits to GDP have gone from 26% in 2007 to 41% at the end of 2nd qtr 2013...41% is the highest its ever been in recorded history (since 1959)
    17 Oct 2013, 01:45 PM Reply Like
  • Lakeaffect
    , contributor
    Comments (1466) | Send Message
     
    They're sitting ducks for the upcoming "one time" supertax on savings and investments.
    17 Oct 2013, 04:33 PM Reply Like
  • mickmars
    , contributor
    Comments (1312) | Send Message
     
    Eh, no need for a supertax when you can just print money to fund the gub-ment.
    17 Oct 2013, 09:19 PM Reply Like
  • EK1949
    , contributor
    Comments (2733) | Send Message
     
    I agree. :-)

     

    OTOH.......if a tax on excess savings (high savers) created political space for tax cuts on high spenders that would be a net plus. Nevertheless I'm reluctant to advocate it, since it might be interpreted as endorsement of the idea that "gub-ment" needs taxes because it wants dollars. It has no use for tax dollars, the use was removing them. They go back to the thin air they came from.
    18 Oct 2013, 01:06 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (35030) | Send Message
     
    The labor participation rate might well be structural, due to the welfarization trend.
    17 Oct 2013, 01:57 PM Reply Like
  • june1234
    , contributor
    Comments (4418) | Send Message
     
    Has more to do with management than politics.In June alone Germany a socialist (even marxist leninist country by some's standards in this country) registered another $25B trade surplus unlike the worlds free enterprise pioneer the US which continues to do it the other way around.
    17 Oct 2013, 02:46 PM Reply Like
  • J Collins
    , contributor
    Comments (178) | Send Message
     
    Must be music to all those fat cats on Wall Street...
    17 Oct 2013, 02:22 PM Reply Like
  • wmateri
    , contributor
    Comments (580) | Send Message
     
    Similarly Evans (and the rest of the Fed) should admit that core CPI inflation has nothing to do with the real rate of inflation and derive a more accurate measure to illustrate the asset bubbles that current QE policy is inflating.
    17 Oct 2013, 04:05 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1817) | Send Message
     
    Just watch the stock market inflate to all time highs to see where all that money is going. Soon banks will be again financing NINJA loans to create a steady stream of MBS to sell to the ravenous Fed. Previously they had to sell to Freddie and Fannie, the Fed has just replaced Freddie and Fannie.

     

    The NINJA loans at low rates will feed an explosion in housing prices again along with an blimp like inflation of the stock market. Price of oil will scale the $150 per barrel mark and gas will easily hit $6/gallon.

     

    All this because a bunch of educated fools are allowed to do whatever they want in the name of "independence".
    17 Oct 2013, 07:01 PM Reply Like
  • EK1949
    , contributor
    Comments (2733) | Send Message
     
    "Just watch the stock market inflate to all time highs to see where all that money is going."

     

    Yeah, it's going to me. I'm in stocks. I have $10.71 in my savings account. My bank has been trying to get me to close it for years, so next time maybe I'll let them.

     

    You know, it's six of one, half dozen of the other with this QE thing. Mosler says the private sector is losing interest income. I say income from realized stock gains make it a wash. He's right that it's a placebo when you get down to it.
    18 Oct 2013, 01:20 AM Reply Like
  • Klaus Müller
    , contributor
    Comments (7) | Send Message
     
    Does one cures a patient by giving him more morphine?? I find curious that the structural problems are not being touched and all they talk about is more monetary stimulus.
    18 Oct 2013, 07:12 AM Reply Like
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