Tags: Roubini | Jobs | Fed | Stimulus

Roubini: Weak Jobs Report Will Spark Fed Stimulus

Friday, 07 Sep 2012 06:27 AM

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The weak August jobs report will prompt the Federal Reserve to roll out a third round of quantitative easing (QE), said New York University economist Nouriel Roubini.

The U.S. economy added a net 96,000 jobs in August, the Bureau of Labor Statistics reported. July's figures were revised down to 141,000 from 163,000, while June's figures were revised down to 45,000 from 64,000. The unemployment rate fell to 8.1 percent, as more people stopped looking for work.

Under QE, the Fed buys bonds held by banks, pumping the economy full of liquidity to drive down interest rates to encourage investing and hiring. The Fed has rolled two rounds of QE since the financial meltdown in 2008, injecting a combined $2.3 trillion into the economy to spur recovery.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

“The economy is weak enough and the unemployment rate weak enough that the Fed is going to do QE3 eventually,” Roubini told CNBC just before the release of the August jobs numbers.

The Fed holds its next two-day monetary policy meeting on Sept. 12 and 13.

“Job creation might be around 100,000 or slightly higher for the next few months, but there’s not going to be any significant reduction in the unemployment rate," Roubini said.

Other experts agree that job growth remains too sluggish.

Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute, says the economy isn’t adding nearly enough jobs to make a serious dent in high unemployment rates and put more people back to work. "I would say a good target number would be 400,000 jobs a month," Furchtgott-Roth told Newsmax.TV in an exclusive interview.

And overall dismal economic growth doesn't bode well for any politician, regardless of party affiliation.

"The soft economic environment that we're having, is not going to be good for any incumbent," said Sam Bullard, Wells Fargo senior economist, CNNMoney reported. "It's a tough sell for anyone in office."

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

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