In an interview published Friday morning, Federal Reserve Bank of Dallas President Richard Fisher said he believes the economy will grow at a faster rate in the second half of the year. Fisher acknowledged that economic activity will remain soft when compared to typical growth levels, but he expected to see the U.S. economy improve on the previous six months.
The major hurdle according to Fisher remains unemployment and Fisher sees no solution that will speed up the process. Ã¢â‚¬Å“ItÃ¢â‚¬â„¢s a slow recoveryÃ¢â‚¬Â, said Fisher when describing the job creation rate, Ã¢â‚¬Å“and itÃ¢â‚¬â„¢s going to continue to be slow.Ã¢â‚¬Â It may also occasionally shift into reverse.
Look at MayÃ¢â‚¬â„¢s poor showing for example. The Non-Farm Payroll for May indicated a miserly 54,000 jobs were created for the month. This weak showing fell considerably short of the 161,000 new jobs predicted prior to the report and underscores just how volatile the employment market remains. Expert predictions are usually pretty close to the actual result but this call was off the mark by nearly three hundred percent!
The outcome was so poor in fact, the unemployment rate actually moved higher in May as the number of new positions created fell woefully short of the jobs that were lost. As a result, the official unemployment edged higher to 9.1 percent from 9.0 percent the previous month.
Interest Rates and Stimulus Spending
On the question of raising interest rates Fisher held firm to the FedÃ¢â‚¬â„¢s message of keeping rates at the current record low for an Ã¢â‚¬Å“extended periodÃ¢â‚¬Â. Fisher also provided little insight into plans for or against further quantitative easing.
Ã¢â‚¬Å“No final decision has been made,Ã¢â‚¬Â noted Fisher when asked if the Fed would engage on a third round of asset purchases. Earlier this week the FOMC confirmed that it would continue to reinvest earnings on maturating securities already held by the Fed but would not Ã¢â‚¬â€œ for now at least Ã¢â‚¬â€œ be adding to the inventory through a direct purchase program.