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To: stomper who wrote (90162)	4/4/2001 7:03:21 PM
From: stomper	Respond to of 436258

Fed Officials Warn Jobless Rate May Rise By Caren Bohan WASHINGTON (Reuters) - Two Federal Reserve (news - web sites) officials on Wednesday cautioned that even though the U.S. economy may skirt a recession, the unemployment rate was likely to move higher in coming months. In separate appearances, Dallas Federal Reserve Bank President Robert McTeer and Chicago Fed President Michael Moskow both predicted an increase in the jobless rate, which at the current 4.2 percent is low by historical standards. ``If the layoffs continue at the present rate, it is inevitable the unemployment rate will go up,'' McTeer told a mortgage banking group in Austin, Texas. His and Moskow's predictions came just two days before the Labor Department (news - web sites) is scheduled to release its monthly employment report, a key reading on the health of the economy. Private economists polled by Reuters expect a small rise in the jobless rate in March to 4.3 percent. They forecast payroll growth of 58,000, slower than the 135,000 rise in February. February's 4.2 percent unemployment rate is only a few notches above the 30-year low of 3.9 percent hit last year. Mysterious Employment Picture Experts inside and outside the Fed have puzzled over the fact that the jobless rate has not risen much despite economic weakness and a rash of corporate layoff announcements. ``There are more being announced than implemented,'' McTeer said, noting that companies were required to announce layoffs 60 days in advance of actual cuts. All 12 Fed bank presidents take part in the meetings of the policy-setting Federal Open Market Committee (news - web sites), which convenes roughly every six weeks. They rotate their voting privileges. McTeer does not have a vote on the FOMC this year but Moskow does. The FOMC has reduced rates three times since Jan. 3 to boost the economy. The cuts total 1.5 percentage points. The federal funds rate, a benchmark for short-term rates throughout the economy, now stands at 5 percent. Fed Chairman Alan Greenspan (news - web sites) has made few public comments about the economy recently. Although he appeared at a trade-related hearing on Capitol Hill on Wednesday, he did not discuss the near-term U.S. outlook. Instead, he hammered home his belief that free trade benefits the economy over the long-run by encouraging competition and productivity growth. Even as they acknowledged that the job market would probably worsen, McTeer, Moskow and several other Fed bank officials who have spoken recently have emphasized that the outlook for the overall economy could begin to brighten soon. HAS ECONOMY HIT BOTTOM? They have also been playing down the notion -- which some private economists have been pushing -- that the United States may already be in a recession, loosely defined as two consecutive quarters of declining gross domestic product. ``I do not think that we're in a recession at this time,'' Moskow told reporters after speaking to a business group in Rockford, Ill. McTeer said many people have asked him what he thought the chances of a recession were. ``I say certainly way above zero, but not above 50 percent.'' After the U.S. economy grew at an anemic 1 percent annual rate in the fourth quarter of 2000, McTeer said, the first quarter of 2001 ``felt like very, very slow growth.'' Atlanta Fed President Jack Guynn, a non-voting FOMC member, agreed with McTeer that the economy right now is barely growing at all but he said the worst might be over. ``My sense is that the rate of deterioration has slowed,'' Guynn told reporters after a speech in Duluth, Ga. ``I think there have been some signs recently that suggest if we're not at the bottom, that we may be close to the bottom.'' Guynn cited some of the latest consumer confidence numbers, housing data and low mortgage rates, among other data. Guynn did not address the issue of whether the unemployment rate was set to rise but said: ``I happen to think the jobs data is going to be one of the really important metrics for us to watch over the period ahead.'' dailynews.yahoo.com