Thank you very much, Mr. Chairman. I am pleased to join with my colleagues in welcoming Chairman Greenspan to this morning's hearing on the Federal Reserve's Semi-Annual Report to Congress on Monetary Policy.
I reviewed Chairman Greenspan's statement this morning with. As usual, it provided a thoughtful overview of the outlook for the economy and signaled the Fed's willingness "to maintain a highly accommodative stance of policy for as long as needed to promote satisfactory economic performance." However, I found little discussion in the statement of what I consider to be a significant concern with respect to our economy today, and that's an exceptionally weak labor market.
Chairman Greenspan's statement mentions that, "incoming data on employment and aggregate output remain mixed." In the context of a discussion of productivity, the statement also says that, "one consequence of these improvements in efficiency has been an ability of many businesses to pare existing workforces and still meet increases in demand. Indeed, with the growth of real output below that of labor productivity for much of the period since 2000, aggregate hours and employment have fallen, and the unemployment rate rose last month to 6.4 percent of the civilian labor force."
Now, in my perusal of the statement, this is the extent of the discussion about jobs and our economy. Given what I believe is the disturbing prospect for employment, particularly at this stage of a so-called recovery, I thought I would take a moment this morning to review in greater detail our employment situation.
Since January of this year the unemployment rate has risen from 5.7 percent to 6.4 percent, the highest unemployment rate in over nine years (since April 1994). 9.4 million workers are unemployed, the most since December 1992, more than 10 years ago. If individuals who have become too discouraged to look for work were included, the unemployment rate would be well over 7 percent.
The economy has lost 394,000 jobs since January, losing jobs each of the past five months. Since February 2001, total jobs have fallen 2.6 million and private sector employment has fallen more than 3.1 million. More than 3 million private sector jobs have been lost since February of 2001, a little over two years ago - two and a half years ago. The last time we had such an extended streak was in September of 1992; again more than 10 years ago.
Continuing claims for unemployment insurance are at a 20-year high of 3.8 million. That's the highest level since February of 1983, more than 20 years ago. There are over 1.1 million Americans who have already exhausted all of their unemployment insurance benefits and are still unable to find a job. The average unemployed worker has been out of work 19.8 weeks. That is the highest duration since 1948 except for 7 months. Those 7 months occurred in 1983 and 1984 when unemployment ranged between 8.0 and 10.1 percent.
Since GDP reached a low in the third quarter of 2001, the economy has lost over 2 million jobs. At the same stage of the early 1990's cycle - when the phrase "A jobless recovery" was coined - the economy had already generated net job gains totaling 482,000 and job growth had already turned positive on a sustained basis by the summer of 1992, just a year after the recession officially ended. In other words, it seems to me we're in a very difficult situation here, and we really need to, kind of, lay this out and then to make some judgments about how to move on it.
Last week the Washington Post reported that the National Bureau of Economic Research, the arbiter of when U.S. economic recessions begin and end, has been unable to declare an end to the recession that began in March 2001 because payroll employment has continued to decline long after the economy resumed growing.
The article noted that employment has never been down so much this far into a post-recessionary phase. The article quotes a prominent Wall Street economist: "The current situation makes the early 1990s jobless recovery look like a hiring spree."
On Monday the New York Times reported that "Teenagers are facing the worst summer job market in years, with the percentage of those holding summer jobs at its lowest in 55 years, and the unemployment rate at its highest in a decade."
I take note of this because there is a serious prospect that the employment situation in the United States may not improve in the coming months, and unemployment may continue to rise. It is not clear that a level of economic growth can be achieved that will bring about a significant improvement in the unemployment rate.
Taken together, it seems to me more focused attention on our employment situation is warranted. Unlike Chairman Greenspan's statement that he finds the situation mixed, I find it very negative with respect to the employment situation.
Chairman Greenspan notes in his testimony (page 9) the achievement of "effective price stability, a long-held goal assigned by the Congress." I would note another goal assigned by the Congress, which he does not mention - "maximum employment."
I think it is important that we focus on this. At a minimum, unemployment insurance should be extended for those long-term unemployed who have exhausted their benefits.
I look forward to hearing Chairman Greenspan=s statement this morning.