The Federal Reserve’s Vice-chairman, Stanley Fischer, says although the economy has added over 200,000 jobs monthly and the unemployment rate is lowering, the labor force participation rate has remained at 62.9 percent, which may indicate dejected workers who have stopped looking for work. This, combined with the soft U. S. housing recovery, is fueling discussion over raising the interest rates earlier rather than later, according to ft.com. Noting the challenge to policy makers is to restore growth, he adds, “It is also possible that the underperformance reflects a more structural longer-term shift in the global economy, with less growth in underlying supply factors.”
He says the quantitative easing policy has been mostly successful, but there is room for improvement in utilizing labor resources, which may keep interest rates low until there is more progress in the jobs market. While noting the difficulty in assessing underutilised production capacity, gross domestic product (GDP) grew a healthy four percent in the second quarter. Similarly to Fed Chairwoman Janet Yellen, Fischer says tighter credit has resulted in slowed home construction, unlike recoveries from past recessions. Sam Zell, Equity LifeStyle Properties (NYSE:ELS) Chairman, said that such conditions could be good for manufactured housing, which as MHProNews readers know, is on a four year uptick. ##