Tags: Fed | taper | Yellen | Trumka

AFL-CIO Union President Trumka Voices Worry About Fed Taper Plan

Tuesday, 11 March 2014 01:27 PM

AFL-CIO President Richard Trumka voiced concern over the Federal Reserve’s moves to scale back its stimulus and said he thought new Chair Janet Yellen would reverse course if the economy is hurt too much.

“It does scare me,” Trumka, whose federation comprises 56 unions with 12.5 million members, said at a Bloomberg Government breakfast in Washington. “If they get it wrong and we slow down too much you’ll start to see unemployment pick up and job creation slack off.”

The Fed in December embarked on a path to reduce its monthly bond purchases by $10 billion at every policy-making meeting. It is currently buying $65 billion worth of Treasury and mortgage-backed securities per month, down from $85 billion in December. The next meeting of the policy-making Federal Open Market Committee, the first with Yellen as chair, will take place March 18-19.

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Trumka said Yellen is unlike her predecessors in appreciating that the Fed has a dual mandate: to promote full employment as well as to control inflation.

“She’s sensitive to the employment issue so I think she will go slow,” he said. “I think she will watch things and if it starts to have an adverse effect and slow things down too much, I think she will reverse it.”

Yellen told the Senate Banking Committee on Feb. 27 that the central bank probably will continue to reduce its asset purchases in “measured steps,” though it would reconsider that plan “if there’s a significant change in the outlook.”

Workers Bypassed

Trumka argued that workers haven’t experienced a recovery even though the economy exited from recession in June 2009.

“You still have a higher unemployment rate now six years into a recovery than you did at the height of the 2001 recession,” he said.

Joblessness stood at 6.7 percent in February. The highest it reached in the 2001 recession and its aftermath was 6.3 percent in June 2003, according to figures from the Labor Department in Washington.

Trumka said that growth of gross domestic product was no longer an adequate way to measure the health of the economy.

“Growth doesn’t mean anything unless it translates out into jobs and it hasn’t been translating out into jobs,” he said. “Then it doesn’t mean anything unless it translates out into people getting above poverty with those jobs.”

“We need a new yardstick,” he said. “We need to really start talking about jobs, about income, about inequality.”

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AFL-CIO President Richard Trumka voiced concern over the Federal Reserve's moves to scale back its stimulus and said he thought new Chair Janet Yellen would reverse course if the economy is hurt too much.
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2014-27-11
Tuesday, 11 March 2014 01:27 PM
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