What Greenspan’s Man Said

The following are not my words, but recent statements from Roger Ferguson, vice-chairman of the U.S. Federal Reserve and the much-touted eventual replacement of Alan Greenspan:

“Clearly, some households have become burdened with excessive debt and may have considerable financial stress should their income become disrupted.”

“One cannot definitely rule out of the possibility that hiring will fall short of expectations over the next several months,” said Ferguson, noting many of the layoffs might be permanent.

Now why would a key Fed member say such things? Whatever the reason, it was enough for a Washington Bureau Chief to release an article this past weekend entitled “U.S. Job Growth May Be Blip.”


Peter Morton made some very positive conclusions:

— Three times as many jobs were created in March than were expected;

— Initial jobless claims came in last week at their lowest level since January 12, 2001; and

— Optimism of U.S. manufacturing executives about the prospects for the next six months reached a recent record in the first quarter.

These three positive economic facts do not fit with the Fed vice- chairman’s remarks. But here is my simple, layman’s observation:

As I scan the newspapers each day (my readings include the New York Times, Wall Street Journal, The Globe and Mail, National Post, Financial Times, among others) and peruse company press releases, why is it that I only see companies announcing job layoffs and I do not see companies hiring?

I read about ABC Company firing 3,000 people here and DEF Company laying off 5,000 people there, but I do not read about companies hiring big like they did before the bear stock market, which started in 2000. Remember 1998 and 1999, when Nortel, JDS, World Com, Enron, and many Internet companies were hiring thousands? Those days have not returned.

So we don’t have any big hiring binges, but we do have great job growth in March, some good economic news coming out, and a Federal Reserve officer telling us not to have big job growth expectations over the next several months. All told, sound like conflicting information, but then maybe the Fed knows something we don’t.