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Temp hiring is seeing a slowdown in Aug-Sept 2012. It declined by 2000 jobs in Sept and made no gains in August. By contrast in the first 6 months about 21,000 temp jobs were added each month. The historical correlation since 1990 of changes in temp employment with ensuing job growth in the next 3 months is 77%. This indicates job growth in the fourth quarter of 2012 will be about 72,000 jobs a month says Irwin, not enough to keep up with population growth, and likely to lead to an uptick in the unemployment rate. The results at temp hiring firms Manpower and Robert Half confirm this trend.

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The U.S. Federal Reserve Open Market Committee's minutes for its April 26-27 meeting show prolonged discussion on an exit strategy from a loose monetary policy. The first step would be to make a significant reduction in the $2.4 trillion portfolio of mortgage and Treasury securities. Fed chairman Bernanke has pointed out that the Fed will first make a decision to reduce its mortgage portfolio by letting the securities to mature without reinvesting in Treasurys as it has done so far. This would be followed by reducing its holdings of long term Treasury bonds in the same manner. These steps would precede raising short term rates followed by the sale of agency securities. The minutes reveal the Fed's thinking and strategy. For instance, the minutes show "a majority of participants preferred that sales of agency securities come after the first increase in the Fed's target for short term interest rates." The minutes also show that "many of those participants also expressed a preference that sales proceed relatively gradually," which could be over a five year period. Economists expect the Fed to wait till sometime in 2013 to raise rates, with the signalling of Fed moves to reduce its holdings before raising rates....

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This Journal editorial points to the low labor participation rate of 63.2% in the U.S. as indication of the high unemployment in September 2013. About 90.6 million men and women over the age of 16 are not working, compared to total employment of 144.3 million, based on Labor Department statistics. Factors contributing to this are the six million baby boomers turning 65 since 2008, more young people staying in school in a poor job market, easier access to government support benefits such as unemployment insurance, disability.

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Moodys Analytics forecasts U.S. unemployment at above 7% at the end of 2013. Part of the reason is the aging population effect and older people dropping out of the workforce, and another reason being businesses have to hire to grow as labor costs have already been cut sharply during the lack of hiring in 2009-2011. The problems in housing with foreclosures, the U.S. deficit, and the eurozone economic crisis will continue to affect the U.S. No mention is made of the effects of a slowdown in China and other emerging markets in addition to the slowdown in the eurozone, as these risks appear to be contained for the timebeing according to Moodys Analytics.

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Kaushik Basu, economist at Cornell University, and Chief Economist at the World Bank, says the U.S. Federal Reserve should consider the current low labor participation rate and low inflation in its rate policy setting decisions in 2015. Basu points out that in the recent past unemployment has gone below the current 5.5% without increasing the risks of inflation. He cites the period from July 1997 to August 2001 when inflation was below 5%, and at some points below 4%, yet inflation in 2002 was close to 2%. The large number of discouraged workers in this economic cycle has placed the unemployment rate below what it really is, says Basu.

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Sudeep Jain provides a discussion of the policy tools India's new central bank chief, Raghuram Rajan, could use to stabilize the rupee. This includes, intervention in financial markets, sovereign bond issue, and further control of liquidity measures. The rupee stands at 61.80 to the U.S. dollar on August 6, 2013, after depreciating in 2012-2013.

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The management of the sovereign debt of different countries. The use of auctions to get lower rates. Shift of a larger proportion of financing to longer term bonds, to reduce rollover risk. The U..as reduced its dependence on short term debt maturing in 12 months, from 45% to 30%.

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With 40% of the unemployment shown as longterm unemployed, U.S. Federal Reserve policies are focussed on bringing down these levels, which pose a risk to the productive capacity in the U.S.

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The U.S. Federal Reserve's decision to extend Operation Twist beyond June to the rest of the year after the June 2012 FOMC meeting. By extending Operation Twist the Fed will buy $267 billion in long-term Treasury bonds and notes and sell short term Treasurys.

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There is strong cirticism from many quarters about low interest rates as a prime culprit in causing the bubble in housing prices. In comments before the American Economic Association, America's Fed Chairman Bernanke defended his role as Fed governor in 2003 when he along with Greenspan was an advocate of the decision to cut the Fed's target interest rate to 1%, and to leave it here for a year and raise it only slowly. Bernanke says countries like Britain, New Zealand, and Sweden had tighter monetary policy but there home prices rose more, and monetary policy explains only 5% of the variation in home prices. Analysis has shown he says that capital inflows such as those the U.S. received from China and other Asian countries explains 31% of the variation in home prices, supporting a contrasting theory that that its these global imbalances that drove the crisis. He also placed the primary fault for the housing bubble on relaxed lending standards and views that housing prices would rise forever. Alongside these comments Fed chairman Bernanke also said that bank supervisors and other financial regulators of which the Fed was one, has a better ability to contain the excesses that led to the economic crisis including housing bubble and other excesses, than the Fed as a monetary policy maker. By saying this Bernanke is acknowledging that the failure of regulation was a key part of what happened in the economic crisis. The failure to fix the regulatory system even now leads Bernanke to say that he is open to using monetary policy as a supplementary tool for addressing risks should another bubble develop, if the regulatory system isn't reformed. Still Bernanke and Greenspan were quite complacent at the time of the low interest rates and did not point out the dangers of global capital imbalances which were evident at the time, preferring to say that the United States could benefit from the inflows of capital from overseas without serious risks. And the Fed did not exercize its role of vigilance in alerting the country to excesses in the way the housing industry operated and in exercizing its own powers to that effect. Instead the Fed as regulator and in role as asafeguard for serious risks let itself become part of the cheering section as the worst excesses in housing were being exposed....

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Labor Department reports U.S. created 209,000 jobs in July 2014. The unemployment rate goes up slightly to 6.2%. Wages went up only by a penny and remain only 2% higher than a year ago. Retail was up by 27,000 jobs, manufacturing by 28,000 in July. Economists say the steep drop in the unemployment rate to 6.2% does not reflect the true conditions in the labor market, as the labor force participation rate is at 62.9%. One economist called this disturbing as some of the youngest workers are dropping out of the labor force. The Alliance for American Manufacuring pointed out that the U.S. manufacturing sector has recovered only about 30% of jobs lost during the recession following the 2009 financial crisis. It said the the lack of investment in infrastructure, high trade deficits and currency manipulation by China and Japan, remain obstacles for American manufacturing's resurgence.

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Allan Meltzer says a Fed QE III woud be bad monetary policy. He puts several questions to Bernanke- how the Fed and Ben Bernanke can know now what is the right interest rate policy in mid 2013, and what reason can the Fed give for adding excess reserves when U.S. banks have $1.6 trillion in idle reserves at the Fed. Meltzer cautions the Fed and other policymakers not to pay attention only to short term forecasts, which can be susceptible to large errors. And calls for attention to the long term consequences of their actions. One point he emphasizes is that the unemployment problem cannot be resolved with short term policy actions nor can it be resolved in a short time. It will take population growth, falling housing prices and rising rents to create opportunities for new construction. Another change is the transition to a less consumption driven and more export oriented economy. This transition which has started will also take time. He urges the Congress and the administration to focus on: reducing corporate tax rates by closing loopholes, long-term reductions in entitlement spending, a 5 year moratatorium on new regulations, and the Fed adopting an explicit inflation target between 0% and 2%....

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Elelven of twelve Fed Governors support the U.S. Federal Reserve's decision to keep rates low till unemployment falls below 6.5%, as long as inflation remains subdued at 2-2.5% and inflation expectations are low. Only the Fed governor of Richmond expressed a dissenting vote. The Fed in its policy statement said it was addressing the problems of the last three years in housing and joblessness. Charles Evans of the Chicago Fed put it this way in a Sept 2011 speech- suppose the inflation rate was 5% when the target was 2%, then central banksers at the Fed would have acted as if their hair was on fire to tackle inflation, then why shouldn't the Fed do the same for unemployment. He succeeded in convincing Bernanke, Yellen and other Fed governors. Bernanke emphasized the enormous cost in human potential and productive capacity of the U.S. economy from high unemployment and people dropping out of the labor force.

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Former U.S. Federal Reserve chairpersons Volcker, Greenspan, Bernanke and Yellen, are together at the International House, on the campus of Columbia University, in April 2016, in a forum hosted by journalist Fareed Zakaria. The discussion covers topics related to the financial crisis of 2008 and its aftermath, with quantitative easing, Fed communication as policy tool, and the gradual increase in interest rates.

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The U.S. Federal Reserve Open Market Commitee takes a position of pause and wait as it decides in March 2012 not to take any new further bond buying stimulus measures. There is uncertainty in equity markets about the effect this will have on equity prices. During the last two pauses in 2010 and 2011 the equity markets experienced downturns after withdrawal of bond buying measures by the Fed, leading to Fed action with QE 1 and QE 2 followed by a surge in equity prices and the S&P at over 1400. At the peak during the 2001 and 2008 dot-com and housing propelled booms the S&P reached over 1500. At this rate the curve for U.S. equity prices for the 2008-2012 period resembles a repeat of a narrow steep V shaped curve with only a 7% climb in April 2012 needed to reach the 1500 point in the S&P 500 average at which the previous two booms in prices ended up in a bust. John Taylor, Stanford economist, in a separate op-ed in the Wall Street Journal on March 29, 2012, called for a change in the mandate of the U.S. Federal Reserve for a more rule based policy because of the dangers of repeated boom and bust periods in the U.S. economy as a result of ultra loose monetary policies. The problem at this point in April 2012 is that profits of companies are not expected by analysts to come in strongly in the second quarter, with a slightly improving unemployment picture, expected upward pressures on oil prices from the Iranian situation, eurozone debt problems in Spain and Italy, and slowing growth in China, India and Brazil. These fundamentals do not support an S&P at the levels seen during the height of the last two booms of 2000-2001 and 2007-2008....

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Apple, Microsoft, Merck, Nike and other U.S. companies raised about $27 billion in the early part of 2013 with bonds yielding about one percentage point above U.S. government bonds. With the increase in yields in Treasury bonds following positive news from the housing sector, an improving U.S. economy and improving share prices in the stock market, corporate bond prices are declining. Apple's 10 year bond declined by 1.15% to 95.85 cents on the dollar. Analysis from William Blair shows Apple's 10 year bonds trading at 97 cents to the dollar if rates on 10 year Treasury bonds were 2%. At rates rising to 3% the Apple bond price would decline to 88.88 cents to the dollar, and a loss of 8.37%.

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High inflation and depreciating currencies in India, Turkey, Brazil, Indonesia and South Africa in 2012-2014.

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The Federal Reserve Open Market Committe voted 7 to 3 to carry out "Operation Twist." This does not involve printing new money as was done for the $600 billion QE II Fed program. This time the Fed will shift its holdings to hold fewer short-term Treasury bills and notes and increase holdings of Treasury securities with longer maturities. The overall impact would be to increase the average maturity of its Treasury securities portfolo to 8 years from the current 6 years. The idea is to put pressure to reduce long tem rates. The Fed says the impact on short term rates is expected to be small because of its conditional pledge made in August 2011 to hold short term rates near zero until mid-2013. The impact of the Fed's move is likely to be modest considering the fact that the average rate on 30 year fixed rate mortgages is already low. It is at 4.09%, according to the latest Freddie Mac survey.

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With firms cautious about hiring the number of temporary workers is increasing. About one fourth of new jobs created in the second quarter of 2012 in the U.S. were for temporary workers. In June 2012 of the 80,000 jobs created a third were for temporary workers. About 8 million Americans work part-time. This is an increase of half a million since March 2012 for people unable to find a full time job. The number of full time workers has declined by 700,000 since March 2012, and self employed workers have increased by 381,000 since March 2012. This gives the picture of a labor market with employers unwilling to commit and hiring temps, using overtime to meet demand.