The recent rebound in hiring doesn’t mean the U.S. is experiencing a robust economic expansion, and further stimulus measures wouldn’t remove obstacles to growth, said John Silvia, chief economist at Wells Fargo Securities LLC.
“We have economic growth but not quite as strong as people had expected or planned on,” the Charlotte, North Carolina-based economist said in an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “Having more stimulus is counterproductive given people’s concerns about inflation and the fiscal deficit.”
Employers in the U.S. boosted payrolls more than forecast in February, capping the best six-month streak of job growth since 2006, Labor Department figures showed today. Those numbers mask an underlying stagnation in Americans’ incomes while a weak housing market, constraints on government spending and overleveraged consumers continue to weigh on the recovery, Silvia said.
The U.S. economy must now resolve some mismatches, with high demand for skilled service sector workers and low demand for low-skilled manufacturing labor as production became increasingly computerized, according to Silvia. That means the Federal Reserve should assume the economy can withstand fewer employment gains without stoking inflation, he said.
U.S. central bank officials see the natural rate of unemployment at between 5.2 percent and 6 percent, and San Francisco Fed President John Williams has been among policy makers in favor of further easing if those labor gains don’t materialize fast enough. The jobless rate held at 8.3 percent last month after more workers sought employment, today’s employment report showed.
The government can no longer rely on “cyclical” remedies and must focus on the long-term goals of retraining displaced workers for jobs in high-growth sectors and moving unemployed Americans to areas with more jobs, Silvia said.
“It’s more of a structural problem,” he said. “There is no quick solution to a financially driven recession.”