“What we are seeing today from an income perspective is our economy is modestly adding jobs,” Robert Hull, chief financial officer at Lowe’s Cos., the second-largest U.S. home-improvement retailer, said at a June 26 consumer conference in Boston. “That’s the good news. The bad news is it’s not sufficient to have a material impact on the unemployment rate.”
At the Fed, the slowdown in both economic and employment growth prompted officials to take additional steps to stimulate the expansion last month. The central bankers said on June 20 they would buy securities to extend the maturities of assets on the bank’s balance sheet, thereby holding down longer-term interest rates.
They also lifted forecasts for joblessness, saying they anticipate the unemployment rate will average 8 percent to 8.2 percent in the fourth quarter of this year versus an April estimate of 7.8 percent to 8 percent.
“After a brighter start to the year, economic momentum has slowed in the last few months,” Federal Reserve Bank of New York President William C. Dudley said during a June 29 speech.
Repeating language the policy makers used when announcing the new measures, Dudley said the Fed is “prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions.” The crisis in Europe and uncertainty over U.S. fiscal policy remain potential hurdles for business investment, he said.
Across the Atlantic, joblessness in the 17-nation euro area rose to 11.1 percent in May, the highest in records that begin in 1995, from 11 percent a month earlier, data showed this week.
Uncertainty in U.S. about the government’s fiscal outlook may still be hampering hiring plans. Congress has yet to resolve the so-called fiscal cliff, which represents more than $600 billion in higher taxes and reductions in defense and other government programs in 2013 that will take place without action.