Fed’s Lockhart Talks Jobs

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