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In Light of a Weak Job Market, Federal Reserve Will Help

Last week, it was unclear whether or not the Federal Reserve would step in to ease the pressure that is being placed on our economy due to a very weak job market. In fact, the Job Openings and Labor Turnover Survey (JOLTS) that was released earlier this week showed us that our job market is anywhere but near recovery. In fact, it seems to be declining. The same time earlier this week, the Federal Open Markets Committee met to discuss whether or not the Reserve would do anything to ease the strain. They decided to extend the Operation Twist program and Federal Reserve Chairman Ben Bernanke hints that the Reserve will likely take more action to ease the strain in the near future.

Yesterday, the Open Markets Committee decided to extend the Operation Twist program. The program was started in order to lower the long-term interest rates of bonds. What they did, and will continue to do with this extension, is sell short-term treasury bonds and buy long-term bonds. With this new extension they agreed to swap $267 billion in short-term bonds by the end of this year. While deciding to extend this program, the Reserve also touched on the lack of jobs growth and employment in our country.

Currently, about 12.7 million Americans are out of a job. If the economy fails to pick up and jobs are not created for the unemployed, Bernanke stated that the Federal Reserve will probably add to the effort it has already made in helping pick up this economy and market. He stated that more action is going to be needed if we cannot “sustain improvement in the labor market.” By the look of things, it doesn’t seem like the market will pick up anytime soon.

A former Fed economist, Dean Maki, was quoted in Business Week saying, “If job growth doesn’t pick up from the recent soft readings in the next few months, then the Fed would likely do more and do a full scale asset-purchase program.” It seems as though that was what Bernanke was hinting at when he spoke to the public on Wednesday. As Spark News stated on Tuesday, we will just have to wait and see what actions the Federal Reserve chooses to take in the near future as well as what actions our leaders choose to take.

: Business Week
IMAGE: Courtesy of Top News

Nicole Nicholson

Nicole is the Content Editor for Spark Hire and mainly writes for and edits the work for the Spark News blog. She graduated in 2010 with a BA in Journalism from DePaul University in Chicago, Illinois. She has a passion for writing, editing, and pretty much anything to do with content. In her free time she frequents the Chicago music scene and writes reviews on shows for her own personal blog. Connect with Nicole and Spark Hire on Facebook and Twitter