WASHINGTON (MaceNews) – The jobs report snapshot was taken in a week this month when the weekly jobless benefit claims disappointed by bouncing above the previous three weeks.
If the monthly report from the Bureau of Labor Statistics is disappointing as well Friday, it will likely not change the views of Federal Open Market participants. As Boston Fed President Eric Rosengren said during the day, he expects a considerable improvement by the end of this year no matter what the May report says.
So one month’s jobs figure, regardless, won’t influence anything about the timing of Fed tapering or influence at what point, next year or the year after, when the central bank begins to turn toward the rest of the decade’s policy posture.
It may happen after President Biden has decided whether to keep Jay Powell at the helm, a decision that will probably be telegraphed well before Powell’s term as chair ends in February. Yes, even if not reappointed, he could stay as a governor until 2028 to help see through the anticipated return to full employment to the unknowable years beyond. Probably not.
The federal government in all its aspects does a poor job of preparing for the unknowable years ahead. As those who serve at its highest echelons often observe, its an operational enterprise, consumed with dealing with the here and now and what’s threatened for the immediate future.
There are planners galore, in the executive branch and to some limited extent on Capitol Hill but they are relegated to the fringes of policymaking. Because there are urgent imperatives driving decisions now. The decisions can’t wait and they consume all of the waking hours which, at the White House, tend to be very long.
The technocrats at the Fed are only somewhat removed from this tyranny of the urgent, but even six weeks between FOMC meetings can seem to be a very short time. And in crises there are conference call meetings and, during the financial crisis, literally hourly updates to absorb.
Constrained as a creature of Congress not to meddle in fiscal policy, and only rarely to be impelled to even address long-term challenges like the growth of the national debt or the implications of climate change, the Fed has maintained a culture of communication that keeps its policymakers on a short leash. They are usually limited to the parameters of monetary policy, financial system supervision and the payments mechanisms it controls.
Usually, but not always.
In that context the observations shared by Philadelphia Fed President Patrick Harker and Atlantic Fed President Raphael Bostic Thursday seemed remarkable, directed not at economists or their congressional overseers, but to American society as a whole:
First on Fed communication: :
BOSTIC: We have access through our jobs to leaders and community response in a broad set of dimensions that many others in this country do not have. So we get to see things and the possibilities of things coming together that may not be readily apparent or understood. When we see that I think it’s in our country’s interest to talk about these things and make sure the right parties are aware of them and try to facilitate people coming together so that we make progress on these issues (of climate change, racial equity).
I think about climate. It’s already here. Change is affecting us. You just need to go to south Georgia and ask the town harvesters how they’re doing and it’s not very good because the climate has hit them hard. So I think not acknowledging that is not in our interest. If we have answers that can help improve things, we should definitely do that. I think there are answers and there’s an ability for … creativity and I think we should do that.
—
Later, Harker, in the OMFIF session, spoke out about the future orientation of CEOs and shareholders:
—
HARKER: Forty-five percent of the birthrate in this state is Latinx. Forty-five percent. Unless we start to bring that community into the middle class, into the society writ large companies are not going to have the customers because they’re not going to have the wealth. And this gets back to the point about fragility. … We know where this goes in this society where you have this increasing separation between the haves and the have-nots. This does not end well in society after society throughout history. … The more enlightened investors, the more enlightened CEOs and their boards realize whether it’s on the racial equity front, or whether it’s on the climate front, unless we get in front of this and start addressing some of these issues, or helping to address these issues, we’re going to be hurt here. And we’re not talking about a hundred years from now. Within a decade we can be severely damaged. So we’ve got to do this. So I think it’s both. That’s long-term shareholder value that they’re trying to create by dealing with these issues up front.
—
Still later, Harker addressed American education:
HARKER: Let’s think about the Sputnik shot and what that did to the American society. We doubled down on investment in education. And that was combined with the GI bill after the Second World War that allowed massive numbers of residents to go get a college education. It was transformative. We’re going in the opposite direction right now. … Think about what we’re doing in America right now, in public universities. Forget the private. Just think of the public universities in America. We are defunding them at a time when the people coming are least able to pay for the increased prices and we’re seeing a new generation – look at the demographics, look at the birth rate. Where is the population growing? It’s growing at the lower income levels. These are the people that need that public higher education at a time when the states have walked away from public higher education. So the price of a public higher education soared all across the country at a time when students need it the most. If we’re going to have this Sputnik moment and create the scientists, the engineers, the business leaders, the social scientists, the humanists we need to move our society forward we need to reinvest in a pretty basic thing which we did when Sputnik took off. … We’re moving in the wrong direction. We need to turn this around.
—
These are Federal Reserve officials? Warning American society about the hazards the present holds for the future?
BOSTIC: I just want to call that a soapbox. That was a good one. … I also think we need to get back to research in the basics, those fundamentals, science, engineering. Because we need to remain competitive. And if that’s happening and there’s investment in those spaces in other parts of the world it’s going to be hard for us to stay a leader in this space. And if we’re not leading the space, we’re not providing the value-add, we’re not going to get the wages and also we’re going to see standards of living start to lag. These are all things we should be trying to prevent if we can possibly do that.
—
The OMFIF session, moderated by Danae Kyriakopoulou, concluded with the question of how central banks involve themselves in the important issues yet avoid the politics:
BOSTIC: The goal is to be dispassionate, to be arms-length, to be fact-based and to be clear about its link to economics performance and success. … In today’s conversation, this session, we’ve talked about education, we talked about broadband, we’ve talked about workforce development, we’ve talked about climate, we’ve talked about racial equity. And I think in every one of those instances the link to economic performance, the link to economic resilience and productivity has been clear and explicit. And as long as our conversations stay in that space we will continue to frustrate everybody. Because we will not be ignoring these realities but we also won’t be advocating for particular solutions. And if we stay in that space, I think that is our role. I think our role is to try to facilitate an economy and economic growth that is as robust, as resilient and as inclusive as possible. If we stay in that role I think we actually increase the likelihood that we achieve that.
HARKER: Amen. Exactly. At the same time reemphasizing the limits of what we can do. And that’s about the issues of what we’re talking about today and more broadly. We have a very limited set of tools to address issues. Start with monetary policy. Everybody wants us to use monetary policy to address all these issues. It’s a very blunt tool, right? Every time you can help one issue you can hurt another issue. So we have to be careful in using that tool. And that’s not our mandate. That’s not what Congress told us to do, to solve all the world’s problems. There’s this book I read over the holidays which was semipopular, “The Ministry of the Future” [by Kim Stanley Robinson]. It’s on climate. All the central banks of the world and solve the climate crisis. That’s not our remit. That’s not what we’re called to do. We need the rest of society to own these issues and to deal with them. We can be part of that. And I think this is where I agree with President Bostic. We need to double down on the dispassionate, objective research that we do with respect to the economy that can help this debate. But ultimately the decisions to be made in this space are not made by Federal Reserve leadership. They’ve got to be made by the American people and people all around the world to make a decision of what they want to do here.
—
And so, a rare look at Federal Reserve officials thinking the big thoughts beyond R*. San Francisco Fed President Mary Daly has been on the same page, all under the gaze of Jay Powell, as the nation emerges from the pandemic challenge to face another new era. It will be one either of decline, a losing proposition for a net debtor nation with a falling birthrate, or ascendance as a country using its ample advantages for renewal and to create even more advantages for itself and a world badly in need of answers and action.
Now, for a look at the mostly irrelevant economic data which unfortunately is all we have to work with, see the upcoming week’s data points below:
UPCOMING ECONOMIC DATA AND FEDERAL RESERVE EVENTS
Monday, June 28 – 10:30a ET Dallas Fed June Mfg Survey (May gen biz 34.9)
Tuesday, June 29 – 8:55a ET US Johnson-Redbook wkly retail activity (prevs +17.6%)
Tuesday, June 29 – 9a ET US Case-Shiller Apr Home Prices (20-city Y/Y +13.2%)
Tuesday, June 29 – 9a ET US FHFA Apr House Prices (Apr Y/Y +13.9%)
Tuesday, June 29 – 10a ET Conf Brd June Consumer Confidence (May -0.3%)
Wednesday, June 30 – 7a ET – US MBA mortgage apps (prvs +2.1%)
Wednesday, June 30 – 8a ET Atl Fed’s Bostic Q&A/Buckhead Coalition
Wednesday, June 30 – 8:15a ET – US Moody’s Analytics/ADP June private payrolls
Wednesday, June 30 – 9:45a ET – June Chi PMI (May 75.2)
Wednesday, June 30 – 10a ET – US NAR May pending home sales (Apr -4.4%)
Wednesday, June 30 – 10:30a ET US wkly EIA oil stocks (prevs -7.6 mln bls)
Thursday, July 1 – 7:30a ET US June Challenger layoffs (May 24,586)
Thursday, July 1 – 8:30a ET Wkly Jobless Claims (prvs 411,000)
Thursday, July 1 – 9:45a ET Markit US Final Mfg PMI (flash 63.9; May 68.7)
Thursday, July 1 – 10a ET ISM June Mfg PMI (May 61.2%)
Thursday, July 1 – 10a ET US May construction spending (Apr +0.2%)
Thursday, July 1 – 11a ET JPM Global Mfg PMI
Thursday, July1 – 2p ET AtlFed’s Bostic on panel for Habitat for Humanity
Friday, July 2 – Auto sales
Friday, July 2 – US May jobs report (Apr 559K/5.8% unemp rate)
Friday, July 2 – US May int’l trade in goods/svcs (-$68.9 Bln)
Friday, July 2 – US May factory orders (Apr -0.6%)
Friday, July 2 – US Baker-Hughes oil rig count (prvs US 470)
—
Contact this writer: denny@macenews.com.
Content may appear first or exclusively on the Mace News premium service. For real-time delivery contact tony@macenews.com. Twitter headlines @macenewsmacro.