The Fed Sends Mixed Message On Economy With Europe Help And Gloomy Report
The markets perked up today on news that the Federal Reserve would step in and provide some limited assistance to Europe. The Dow Jones Industrial Average surged 490 points -- its largest gain since March 2009 -- on news that the Fed was coordinating an effort with other central banks to provide liquidity to markets shuddering from the sovereign debt crisis in Europe.
Less rosy, was the picture that the Fed painted of the U.S. economy. On Wednesday the Fed also released its beige book, a report compiling economic information from the Fed's 12 districts around the country.
According to the report: Hiring barely grew between September and November, while companies in some areas either found it difficult to find skilled workers or were concerned that the skills of the unemployed were deteriorating. The Federal Reserve Bank of San Francisco reported "high levels of unemployment and limited demand for new employees" in the Western United States, the Federal Reserve Bank of Dallas said that employment levels in Texas remained "steady," the Federal Reserve Bank of Chicago wrote that "hiring plans remained limited," and the Federal Reserve Bank of Cleveland reported that "hiring remains at a low level across almost all industry sectors."
"The pace of the economic recovery has been less vigorous than desired or expected," Janet Yellen, vice chair of the Federal Reserve, said in a speech at the Federal Reserve Bank of San Francisco on Tuesday. "The number of jobs in the private sector remains more than 6 million below the peak level reached in early 2008--a distressing development."
Companies in the southeastern United States have focused on hiring temporary employees because they are not expecting a substantial increase in consumer demand, according to the Federal Reserve Bank of Atlanta. There have been some job openings in highly skilled professions though. The Federal Reserve Bank of Boston reported that in the northeastern United States, there has been more demand for workers in law and information technology, while employers struggle to find skilled computer control operators, welders, and medical assistants. The Federal Reserve Bank of Cleveland similarly reported that job openings in the Midwest there have been concentrated in professional business services and energy, and the Federal Reserve Bank of Kansas City reported that some businesses found it difficult to hire skilled workers in energy and information technology and were forced to raise wages in response.
The lone spot of increased hiring in the Western United States was in information technology, especially for software developers, according to the Federal Reserve Bank of San Francisco.
As job opportunities are disproportionately weighted toward workers with more skills, the skills of the unemployed are deteriorating as they languish without additional experience. Many firms are recruiting the best workers at other companies instead of hiring unemployed people, adding to "growing concern that the skills of the unemployed were deteriorating," wrote the Federal Reserve Bank of Atlanta.