After a rapid three months to start off 2014, we can finally look back to analyze where we might be headed for the rest of the year. According to The New York Times, there was an “addition of 192,000 jobs last month, all from private employers.” The weather did not seem to slow down the rise in jobs. However, it is also true that the level is still far below what is needed to fully accommodate the millions of people who have joined the work force since the recession and those who still have been jobless as well. Will the number of jobs added in April slow down? I believe our government can play a key role in aiding our economy and its’ job growth. However, they are currently doing very little in attacking fiscal policy changes to keep a steady pace for the coming months.
Although individuals like chief economist Jed Kolko at Trulia, mentions in The Wall Street Journal that there were improvements in jobs like construction and that young-adult employment is slowly making its way back to ‘normal’ levels, many others are convinced that the areas like the housing market may be cooling down and that we aren’t being led in the right direction.
Throughout the beginning of 2014, we have been continuing to approach the employment level the economy was at when the down turn of jobs started to fall in 2008. However, our government cannot slow down its work and needs to “step on the accelerator” to continue to keep moving the economy. With this in mind, the market it still sensitive to the economy and our government needs to increase their activity and work together. Our government seems to be sitting back on work that’s already been completed.
Dallas Federal Reserve Bank President Richard Fisher accused U.S. politicians on Friday about their inability to cooperate and “accused them of impeding jobs growth.” Fisher added, “If the U.S. had the right fiscal policy, the country would have an ‘incredibly fast-moving economy.’”
Has U.S. stepped on the brakes and let the economy play out?
Fisher backed himself up adding that “the U.S. Federal Reserve must avoid being locked into calendar-based policy commitments and instead ensure its forward guidance is flexible enough to allow it to respond to changing conditions.”
I believe that we, in fact, should be worried that predictable commitments are unsound policy. This in turn would lead to false complacency and market instability. Our economy cannot afford to take this extra weight.
Some, like Fed Chair Janet Yellen, found the market’s sensitivity to be true when proclaiming an interest rate hike could follow around six months after the central bank ends its bond-buying stimulus. This time period was earlier than investors had expected causing stock, bond, and currency markets to take a hit from this very instance. I believe we are witnessing a pause on our economy from here on out. With our government lacking the ability to be able to work together, we may find ourselves at a standstill throughout the summer months. Our government cannot implement a plan and expect it will work everything out for the next couple years. They must continue activity and working to build the economy even as we still grow today. Otherwise volatility might be the theme for the coming months in the markets and I don’t believe last year’s rally will occur again this year.