-- Repeating story from earlier
MONTREAL (Dow Jones)--Federal Reserve Bank of Dallas president Robert McTeer said Thursday the softness of the labor market is one of the continuing sticking points of the economic recovery.
"So far, our rebound bears some resemblance to the so-called jobless recovery" that occurred in the early 1990s, McTeer told attendees at a speech he gave before the Montreal Economic Institute in Montreal. McTeer is a voting member of the interest-rate setting Federal Open Market Committee, which next meets in a two-day gathering at the end of June.
The Dallas Fed president was referring to what proved a fairly tepid move away from economic recession at the turn of the prior decade. While Fed officials and private forecasters agree the economy has emerged from recession they continue to note that the labor market has not yet improved in any significant way.
For most, the hope is that employment will improve after the rest of the economy does. McTeer said "employment is a lagging indicator," suggesting that he's expecting the worst of the job losses are now over.
McTeer said that he expects that the growth rate for the second quarter gross domestic product will likely stand between the 1.7% seen in the final quarter of last year and the 5.6% reported for the first quarter of this year. That echoed a recent comment made by the bank president.
Also reiterating a theme advanced by most of his fellow Fed policy makers, McTeer said that with consumer spending having remained relatively steady, it will be up to the business sector to determine the ultimate magnitude of the economic recovery.
"This was a fairly unusual slowdown and downturn. It was not based on consumer spending but on investment," McTeer said. "If it's going to be a healthy recovery," investment spending must be the driver, and there are some signs that improvements are starting to occur.
Indeed, the very strong pace of productivity should help, and that strong rate of productivity augers well for future growth levels, he said.
In response to reporters' questions about the recent drop in the U.S. dollar relative to other key currencies, McTeer said, "I don't really want to comment on the dollar."
But he did say that that just as the weakness of the Canadian dollar has been puzzling to him, "the cause of the strength of the U.S. dollar until recently is a mystery to me as well."
McTeer also said that he viewed the strong rise in the April consumer price index as a bit "disconcerting," although he said the gains were largely attributable to volatile energy prices.
-Michael S. Derby, Dow Jones Newswires; 201-938-4192; michael.derby at dowjones.com
I guess those low-volitility health-care costs (ONLY go up) are too mysterious to take into account.