20101028 unemployment paperwork 35
NEW YORK - OCTOBER 08: Dale Chandler's unemployment insurance notice sits on a table on October 8, 2010 in the Brooklyn borough of New York City. The U.S. government reported today that the U.S. economy continued to shed jobs for the month of September. The unemployment rate remained unchanged at 9.6 percent in August - 


JEREMY HOBSON: Now to the job picture. The payroll company ADP said this morning that private businesses added 43,000 jobs in October, after slashing 2,000 in September.

Let's turn to Richard DeKaser, economist with the Parthenon Group. He joins us live from Boston. Good morning.

RICHARD DEKASER: Good morning.

HOBSON: First of all, what's your reaction to that private sector jobs number?

DEKASER: Well this is mostly good news, as you said. The same indicator showed a 2,000 loss in September, so 43,000 certainly an improvement on that. It's also double what most forecasters were predicting and double what we averaged during the doldrums of this past summer. So, there's the good news. The bad news, however, is that it still falls well short of what we need to drive the unemployment rate down from its very very lofty levels. We need to see 150,000 or so. So in that respect it's still coming up short. Directionally going in the right way, but by magnitude, still coming up short.

HOBSON: Not as good as we'd like. Richard, secondly, we are due to hear from the Fed later today. Policymakers are expected to announce some new stimulus efforts to boost lending and spending. What are you expecting from the Fed, and how much of an impact can the central bank have when it comes to dragging us out of this economic slump.

DEKASER: What I expect is that they're going to give us an announcement which will indicate that they're preparing to buy securities -- these are probably going to be treasury notes -- from the public starting very soon. and they're not going to be very specific with respects to the quantity -- that is how much of this they're going to do. They're going to tell us it's going to be conditional on economic outcome. If inflation is too low, they'll continue. If unemployment is too high they'll continue. So we don't know the total amount, but we're going to hear a signaling of the start of something which could be quite persistent. Now, what does it do? It's really intended to lower interest rates and put cash in the banking system. Ultimately leading to more lending and more economic growth. So this is unconventional policy. usually the Fed just manipulates short term interest rates directly. It can't do that any more, because they're already at rock bottom levels, so it's using these unconventional tools to try and stimulate the economy they will probably be somewhat effective but again, we're at the point now some might say they're pushing on a string, and effect is likely to be limited.

HOBSON: Richard Dekaser, economist with the Parthenon Group, thanks as always for talking with us.

DEKASER: My pleasure.