A job market that is weaker than official statistics show and subdued inflation should make Federal Reserve policy makers wary of withdrawing stimulus from the economy, Eric S. Rosengren, president of the Federal Reserve Bank of Boston, said Thursday.
Although the nation’s unemployment rate declined in January to 6.7 percent, the lowest rate in more than five years, it does not include millions of workers who have given up jobs searches or could only find part-time work. If those workers were counted as unemployed, the rate would exceed 10 percent, Rosengren said.
More than 20 million Americans, he noted, are unemployed, underemployed, or so discouraged by job prospects that they have stopped looking for work.
“For many Americans, the labor market remains very difficult,” Rosengren said at New College in Sarasota, Fla. “While the traditional unemployment rate is an important measure, it’s decline does not capture the wider difficulties in the labor market that are being felt by so many Americans.”
The Federal Reserve has pushed forward with a plan to shrink its bond-buying program aimed at lowering long-term interest rates because of a strengthening US economy. Since the end of last year, the Fed has cut the monthly bond purchases to $65 billion from $85 billion.
The Fed said it was likely to continue the retreat, but reaffirmed its plan to keep short-term rates at record lows until the economy is significantly stronger. “I firmly believe that monetary policy makers should remain quite patient,” Rosengren said.