US economist says there are more jobs than growth

The US economy has a “much greater number of jobs than people would like to think” and is not facing a shortage of workers, according to the president of the Federal Reserve Bank of Minneapolis, Janet Yellen.

Ms Yellen’s remarks on Thursday came during a two-day conference in Washington organised by the Federal Deposit Insurance Corporation, which is the federal government’s central bank.

She said the central bank had raised its benchmark interest rate for its next three-month bond programme from 0.25% to 0.5% as it prepares to cut interest rates by 0.75 percentage points and keep the Federal Funds rate at zero.

The Fed’s decision to cut the benchmark rate will likely be welcomed by many in the markets who believe that the central banks stance will be a key factor in the economy, particularly as it comes on the heels of the Fed’s first interest rate cut since 2008.

The economy has lost almost one million jobs since the beginning of the year, with a loss of more than 3 million jobs in April. 

“The labor market has continued to be resilient,” Ms Yellen said.

“We’ve had two quarters of jobs gains, we’ve had some signs of slowing activity, but we’ve been able to sustain our momentum over the past few weeks.”

She said the Fed had raised the Fed Funds rate twice this year, once on June 22 and again on June 24, and would again do so on July 3.

The central bank is expected to start a new bond programme next month, but Ms Yelles comments came just days after the Federal Housing Finance Agency said that the housing sector had lost 3.7 million jobs during the first quarter of the fiscal year, which ended on April 30.

The report comes as the US has been buffeted by a string of recessions and the biggest economic downturn since the Great Depression, with millions of Americans unable to find work and millions of others struggling with stagnant incomes.

Ms Yellens comments come amid warnings from some economists that the economy may be slowing, as the Fed moves to lower the benchmark interest rates. 

The Fed is now considering whether to hold the benchmark rates at zero, which would bring down the cost of borrowing for banks.

The Bank of Japan has raised the benchmark Japanese interest rate to 1%, from 1% in January. 

Some analysts have said that a rise in the Fed interest rate could be a game changer for the US economy. 

On Thursday, the US Federal Reserve also raised its forecast for the economic growth rate in 2018. 

Fed Chair Janet Yellings remarks to the US Chamber of Commerce conference in Atlanta, Georgia on Thursday, July 1, 2019.

The rate cut will be effective from March 1. 

In the meantime, the Fed is preparing to raise the benchmark US federal funds rate to a level of 0.625%, the lowest since February, to keep the economy from overheating.

It is also likely to cut rates for a third time in less than two years.

“The unemployment rate is currently at a historically low level, and is well below its peak in the summer of 2015,” Ms Fed said. 

Ms Yells comments came after the president said that while the unemployment rate had fallen to a five-year low, the unemployment figure is still far too high and that it was not a good indicator of whether the economy was on the right track.

“I think that we have to do much more than that,” Mr Trump said at a news conference on Thursday. 

Mr Trump is also concerned about the health of the economy and said that he had asked Ms Yells to give him a more realistic outlook on the state of the US economic recovery.

“There is no doubt that we are seeing signs of recovery, but it is still too early to call that a recovery,” he said.

“The economy is not on the path of a sustained economic expansion, and it will take a lot more than a five percent improvement in the unemployment numbers to put us on the correct path of economic expansion.” 

Mr Yellen is the first US economist to speak publicly about the Fed decision to lower its benchmark rate.

She has said the Federal Open Market Committee, which has the power to raise or lower interest rates, has been more conservative than the Federal Treasury in its rate decisions.