Former Texas Republican Congressman Ron Paul outlines his view on the U.S. economy, saying the labor market isn’t nearly as strong as some commentators are suggesting and that the Federal Reserve is unlikely to raise the interest rate later this year. (Source: US Economy ‘Booming’ – Fed Rate Hike On The Way?, July 10, 2015.)
The latest report shows that the number of people who applied for U.S. unemployment benefits climbed to their highest since February. Paul cited, “the number did not meet expectations or slightly worse than expected and it wasn’t a disaster.” He added, “…because the total number still remains below 300,000 is considered not a real weak economy.”
After the financial crisis in 2008, labor participation has dropped significantly. Paul thanks the Federal Reserve’s Keynesian policies saying, “…number shows that the recovery did not do anything but drive everybody into non participation.”
Last week the government reported that the unemployment rate dropped to 5.3% in June. As it seems, this is believed to be great news. But Paul explains that much of the drop in the unemployment rate is because many people already left the labor market and labor participation has accordingly shrunk.
Despite the fact that mainstream economists insist the economy is doing well and the job market is strong enough, Paul argues the fundamentals remain weak and the economy is not as good as people think.
Meanwhile, the Federal Reserve has repeatedly signaled that it plans to raise the interest rate after being kept near zero for almost a decade. On top of that, one of the major criteria that policymakers have been monitoring in order to change their monetary policy and finally raise the interest rate has been the labor market.
The former Congressman thinks that despite the so-called strong labor market and the unemployment rate being at its lowest rate since the financial crisis, he said, “They know [the Fed] that things are weak, […] this is the reason that I think the Fed is not about to raise the rate.”